South Africa has joined the 'big boys' club. The informal 'elite' grouping of major emerging powers - Brazil, Russia, India, and China (BRIC) - have invited South Africa to join their 'club'. As some of you may know, these countries have banded together to counter the G7 countries (although all of them, along with SA and Mexico, have been invited to G7 summits these last few years). Henceforth, the name of the group will be referred to as BRICS.

SA's invite is a major coup given that far bigger economies have been begging to join the group, but have been repeatedly passed over. In my opinion, Indonesia, Turkey, and Mexico (as well as South Korea) are more appropriate candidates given their relatively large economies, large populations, and relatively high economic growth / potentials for growth.

However, methinks SA's selection is more symbolic and strategic rather than merited on the country's size internationally. After all, given SA's economic size relative to the rest of Africa (biggest African economy, by far), and its post-1994 leadership role on the continent, it makes sense to include SA on the basis of it being a fellow regional superpower, which is a role / status all the other BRIC countries have in common. Of course, SA's selection is a slap in the face to Nigeria and Egypt, both of which were also hoping to become part of the group. Now their inclusion in the near future seems unlikely. SA's invite is also a bitch-slap to Goldman Sachs' economist, Jim O’Neill, who actually coined the term 'BRIC' a decade ago. He has gone on record dismissing SA's aspirations to join the group. In fact, the didn't even include SA in his Next 11 (N11) group of emerging countries, after BRIC.

Aside from the bragging rights SA's inclusion into BRIC will entail (for example, a country like Australia will likely never become a BRICS member no matter how much they beg to join) it will be interesting to see if SA's new status will translate to greater direct foreign investment. The rand immediately strengthened to its highest level in almost three years on news of SA's inclusion.

We live in interesting times...

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South Africa asked to join emerging powers bloc
By the CNN Wire Staff
December 24, 2010 1:07 p.m. EST

Johannesburg, South Africa (CNN) -- Established already as a key player in Africa, South Africa boosted its image Friday after it was formally invited to join a federation of soaring global economies.

China, South Africa's largest trading partner, extended the formal invitation, said Maite Nkoana-Mashabane, South Africa's minister of international relations and cooperation.

She expressed appreciation at the invitation to join the so-called BRIC -- Brazil, Russia, India and China.

Nkoana-Mashabane had written to her BRIC counterparts last year to push for South African membership.

"The rationale for South Africa's approach was in consideration of a matter of crucial importance to BRIC's Member States, namely the role of emerging economies in advancing the restructuring of the global political, economic and financial architecture into one that is more equitable, balanced and rests on the important pillar of multilateralism," she said.

"Our approach to intensifying our relations with emerging powers and other countries of the South is, of course, through active and strong bilateral engagement."

The BRIC countries account for about half of global growth and represent 40 percent of the world's population.

"In the coming decade, we expect this trend to continue and become even more pronounced," a Goldman Sachs report on BRIC said.

Though South Africa is considered an economic powerhouse on the continent, it has been suffering from a recession and high unemployment.


http://www.cnn.com/2010/WORLD/africa/12/24/south.africa.bric/

South Africa Asked to Join BRIC to Boost Cooperation With Emerging Markets
By Nasreen Seria
Dec 24, 2010 7:17 AM PT

South Africa has been formally asked to join the BRIC group of major emerging markets, comprising Brazil, Russia, India and China, bolstering its position as Africa’s champion.

Chinese President Hu Jintao wrote a letter to his South African counterpart, Jacob Zuma, to inform him of the decision and inviting him to the BRIC’s third heads of state meeting in Beijing next year, Chinese Foreign Minister Yang Jiechi said in a statement on his ministry’s website today.

South Africa, which has a population of 49 million compared with China’s 1.36 billion, is betting on raising its clout on the world stage by joining BRIC, while strengthening political and trade ties within the bloc. The country accounts for about a third of gross domestic product in sub-Saharan Africa and will offer BRIC members improved access to 1 billion consumers on the continent and mineral resources including oil and platinum.

Joining the group is “the best Christmas present ever,” South Africa’s Minister of International Relations and Cooperation Maite Nkoana-Mashabane told a reporters in Pretoria today. “We will be a good gateway for the BRIC countries. While we may have a small population, we don’t just speak for South Africa, we speak for Africa as a whole.”

Zuma has made state visits to all of the BRIC nations since coming to power in May last year and the government has “lobbied very hard” to be included in the group, which will now be known as BRICS, Nkoana-Mashabane said.

‘Powerful Country’

Africa’s biggest economy is a “powerful country,” even though it’s small compared with the other BRIC nations, Alexei Vasiliev, Russian President Dmitry Medvedev’s envoy to Africa, said on Dec. 22.

South Africa has an economy of $286 billion, which is less than a quarter of that of Russia, the smallest of the BRIC nations. Its population is also dwarfed by India’s 1.2 billion, Brazil’s 191 million and Russia’s 142 million.

Goldman Sachs Group Inc. economist Jim O’Neill coined the BRIC term in 2001 to describe the four nations that he estimates will collectively equal the U.S. in economic size by 2020.

“South Africa’s economy is very small,” O’Neill, who is now chairman of Goldman Sachs Asset Management International, said in an interview from London today. “For South Africa to be treated as part of BRIC doesn’t make any sense to me. But South Africa as a representative of the African continent is a different story.”

‘Big Boys’

At their first summit in Russia in June last year, the BRIC heads of state called for emerging economies to have a greater voice in international financial institutions and for a more diversified global monetary system.

“South Africa as a country is small, but if we go there as a regional market, that’s a different story,” said Martyn Davies, chief executive officer of Johannesburg-based Frontier Advisory, which provides research and corporate finance services on emerging markets. “For South Africa, it’s nice to be associated with the big boys.”

South Africa is the only African nation represented in the Group of 20, and will take up a two-year seat on the United Nations’ Security Council along with India and Brazil next year, resulting in all BRIC nations being represented on the council. The African nation is also part of a trilateral group with India and Brazil, known as IBSA, created in 2003 to coordinate action between the three emerging economies in global forums.

“We bring the most diversified and most advanced economy on the continent,” said Nkoana-Mashabane. “We may not be the same size, but we can open up opportunities for them and through that, we can complete our economic integration on the continent.

South Africa’s rand gained against the dollar to its strongest level since Jan. 15, 2008, trading at 6.7308 to the dollar as of 5:13 p.m. Johannesburg time.

To contact the reporter on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net.

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg

http://www.bloomberg.com/news/2010-12-24/south-africa-asked-to-join-bric-to-boost-cooperation-with-emerging-markets.html

Sweet. This will keep goverment on is toes, like FIFA did :)

If they add Kazakhstan then it would be BRICKS.

SA seeks trade and investor gains from joining Bric club

HOPEWELL RADEBE
Published: 2010/12/28 06:31:41 AM


SA EXPECTED to gain substantial trade and investment benefits when it joined Brazil, Russia, India, China in the Bric grouping of emerging economies, a top government official said yesterday.

SA appears set to join the bloc after an invitation extended last week by China, which holds the rotating chairmanship.

The invitation was made in a telephone call to International Relations and Co-operation Minister Maite Nkoana-Mashabane by her Chinese counterpart, Foreign Minister Yang Jiechi.

Although SA’s government has long aspired to be in the Bric league, most commentators feel its economy is dwarfed by those of the Bric countries, whose growth rates have been the envy of the developed world especially during the recession.

In a recent commentary, Prof Mills Soko of the University of Cape Town Graduate School of Business said SA should not be "obsessed" with joining.

Prof Soko argued that markets in the rest of Africa, the Middle East and other Latin American countries should not be neglected, and emphasised that the Bric grouping was not in fact an organisation, but the construct of an economist, and did not have a strategy, or clear objectives.

"We cannot engage in an ill- defined, ad hoc manner," Prof Soko said, emphasising SA should understand the trade policies of the Bric countries and how these would affect it, and what competitive pressures these would apply. While Bric countries represented markets for South African goods, they were also competitors in sectors such as steel, clothing and textiles and the automotive industry.

However, in an indication of SA’s foreign policy priorities, President Jacob Zuma has made state visits to each of the Bric countries since coming to office.

Goldman Sachs Asset Management chairman Jim O’Neill coined the term "Bric" in 2001 to describe the four countries whose joint output would, he said, equal that of the US by the year 2020.

China’s "invitation" to SA comes barely a week after Russian President Dmitry Medvedev’s envoy to Africa, Alexei Vasiliev, said his country expected SA to join as early as next year .

SA has argued that its accession would give it some economic and developmental advantage in Africa, while promoting the development of Bric and enhancing co-operation among these emerging market economies.

SA stands to benefit from the potential preferential trade pacts and economic co-operation agreements that could be concluded with Bric countries, whose combined population of 2,5-billion people shares between them an estimated annual gross domestic product of more than 9-trillion.

Sipho Nene, acting director- general of the Department of International Relations and Co- operation, said the department’s motivation to Mr Zuma about joining Bric was that it was for SA’s economic and political benefit. "Since Bric has no secretariat, the body does not yet have financial obligations for our country, but we anticipate huge trade and investment spin-offs from it."

On the economic front, he said SA stood a chance to negotiate positions that would enhance its trade and leverage the potential for direct foreign investment from Bric member states.

"By joining Bric we are not starting from scratch … we are merely building on already established trade agreements, standing binational commissions or bilateral relations and other diplomatic and economic links with Bric countries who are already SA’s strategic partners.

"This membership is aimed at keeping SA as an important player in various organisations outside the United Nations, which is supposed to remain the pillar of cooperation and collaboration for the world," Mr Nene said.

Mr Yang indicated that Chinese President Hu Jintao had also invited Mr Zuma to attend the third Bric leaders’ summit, to be held in China next year.

Ms Nkoana-Mashabane said SA was ready to step up communication and co-ordination with China and other Bric members.

"Our approach to intensifying our relations with emerging powers and other countries of the South is through bilateral engagement," she said.

"We also see the Nonaligned Movement and the Group of 77 as important for South-South interaction, especially in the framework of the United Nations.

"Our trilateral partnership with India and Brazil (Ibsa) will get a better balance, and become even stronger, with SA a member of the Brics. SA’s diversified foreign policy objectives and interests allow both groupings (Ibsa and Brics) to co-exist. The mandates of Brics and Ibsa are complementary," she said.

radebeh@bdfm.co.za


http://www.businessday.co.za/articles/Content.aspx?id=130374

Russia expects South Africa to join its BRIC alliance with Brazil, India and China as early as next year to give Africa’s largest economy a bigger say in global affairs, President Dmitry Medvedev’s envoy to Africa said.

“We can assume that South Africa will formally become a member of BRIC,” Alexei Vasiliev said in an interview in Moscow today. Vasiliev accompanied Medvedev last year on the Kremlin leader’s first official visit to Africa.

South Africa in February formally asked to be admitted to the bloc of nations, which held its first summit in June 2009 in Yekaterinburg in Russia’s Ural Mountains region. South Africa should join BRIC because of its strategic importance rather than its size, Trade Minister Rob Davies said in a Dec. 15 interview.

Goldman Sachs Asset Management Chairman Jim O’Neill coined the BRIC term in 2001 to describe the four nations that he estimated would equal the U.S. in joint economic output by 2020. Medvedev said on Nov. 12 that the BRIC group had reacted positively to South Africa’s request to join. BRIC leaders are due to meet in Beijing next year for their third summit.

South African President Jacob Zuma has lobbied for stronger political and trade ties with BRIC counties since coming to power last year. South Africa’s gross domestic product of $286 billion is less than a quarter of Russia’s, the smallest economy in the alliance. Its population of 49 million is also dwarfed by China’s 1.3 billion, India’s 1.2 billion, Brazil’s 191 million and Russia’s 142 million.

“South Africa represents a third or quarter of the continent’s entire GDP,” Vasiliev said. “It’s a powerful country, though of course it’s not comparable in size to other BRIC countries.”

The second BRIC summit was held in Brazilia in April.

An interesting perspective on this issue posted by a newspaper reader.


Thicker than BRICSby George Annandale
2010-12-29

Poor children, hoping and dreaming of a better and more prosperous future than the life they have become used to: hungry for the good things will - in an attempt to get a piece of this wonderful perceived world of wealth and largesse - often try to attach themselves to groups of rich kids, often humbling themselves and suffering great humiliation in their vain attempts to be part of this world of money and bling.

Too often the poor kid ends up a skivvy to be cast aside when he becomes inconvenient or if he is not found to be expedient anymore.

It is for this reason that South Africa in the shape of Jacob Zuma has been crawling at the feet of the “rich kids”, Hu Jintao (China), Medvedev (Russia), Singh (India) and Silva (Brazil). The analogy are clearly illustrated by the GDPs of the respective members of this group with China’s GDP greater than that of the three similar sized economies (Brazil, India and Russia) whilst the poor kid, South Africa has an economy, less than a quarter the size of the smallest economy in that group, Russia - a situation that are being exacerbated by the day as those economies grow at rates in excess of 7% per annum whilst the South African economy, thanks to the headless and confused Economic Cluster of Disaster (Ebrahim Patel, Manuel and Davis) bumbling around in the gloom of revolutionary Alliance rhetoric.

It is clear that the gracious invitation by Hu Jintao for South Africa to join this selected club has nothing to do with our economic ability but rather our willingness and even eagerness to be used and abused at the expediency of the so-called BRIC countries.

It is clear that South Africa has very little to offer to this grouping, which exist for one purpose only; to expand the influence sphere of China in the first place and, to a lesser extent that of Russia. The objectives of China is the creation of markets for their goods and services; obtaining sources of raw material to feed their industries and supply job opportunities for their millions of citizens; skills and technology they can replicate and most importantly, political influence.

South Africa provides that better than anybody else, they don’t need coercion to the bidding of China, they will prostitute themselves willingly as clearly indicated by our attitude towards Myanmar, North Korea, the Dalai Lama and the plight of Tibetans and the cold shoulder given the Nobel Peace Laureate, Liu Xiabo.

South Africa has already shown its willingness to provide discounted iron ore and ferrochrome resources to China, India and Russia. The country is also critical in the provision of financial services at China’s terms, clearly illustrated in the Standard Bank deal which clearly contributed to the woes of that bank, to access African markets.

China are also using South Africa as a useful fool, willing to ensure Mugabe - having shown his willingness to sign his country’s treasures over to Chinese entities, at a great discount in exchange for a handy commission - stays in power. Countries like South Africa are expedient in the world according to China, whilst they attack and castigate the guilt ridden Imperialists, begging bowl in hand, choking them with demands for aid, China are covertly slipping the choke chain over their heads and, like an obedient dog, South Africa will be too happy for scraps from the table of the new master.

In the end there will be more jobs for South Africans; jobs in industries and sectors now scorned; jobs on mines and farms, jobs frowned upon and not worthy of entitled South Africans, but the Chinese will not pay the prices South African workers want, they will want more efficient output than we can give; they will expect their raw material at a competitive price (a bargain) and consequently the South African worker will have to produce at the price of his Chinese, Indonesian or Indian counterpart.

The “Bricification” of South Africa, like the Soccer World Cup, will no doubt make some very proud, but like the WC - an economic non-event according to some and a disaster according to others - which brought South Africa economically nothing whilst enriching FIFA, it will be an economic non-event, costing South Africa dearly.

All this does not particularly bother the ruling elite. They will benefit and prosper; like the tribal kings and chieftains centuries ago they will sell their people into slavery without blinking an eye and, like the rulers of today blaming the western imperialists for their part in slavery, so will rulers; a hundred years hence look back and blame Zuma, Mugabe and their likes for the slavery brought about by the “Bricification” of the black continent.

SA, not just another Bric in the wall
JON HERSKOVITZ
JOHANNESBURG, SOUTH AFRICA
Dec 29 2010 16:55

South Africa's ascension to the Bric group of major emerging economies was more about politics than economics and reflects expectations it will be the gateway for investment in the fast-growing continent.

South Africa, with a $285-billion economy, a much smaller population and tepid growth of about 3%, pales in comparison to Bric states Brazil, Russia, India and China.

"It's not a natural fit," said Razia Khan, Africa head of research at Standard Chartered.

South Africa's economy is less than a quarter of the size of Russia's, which is the smallest in the original grouping. While it may be the largest in Africa, it is only a bit bigger than China's sixth-richest province.

South Africa's biggest backer for Bric has been its largest trade partner, China. Last week, Beijing extended an invitation for Pretoria to join and asked President Jacob Zuma to attend a summit of Bric leaders it will host next year.

"This is something that China sees in its own interest with its aim of understanding the future of Africa and becoming an ever bigger presence there," said Marvin Zonis, professor emeritus at the University of Chicago Booth School of Business.

"It is really smart on the part of China to do this and it is also really good for South Africa. It legitimises South Africa as a future global power and as an investable country," Zonis said.

China has invested heavily in Africa for years, seeing it as a source of commodities to power its economic engine and an export destination for its products that will grow over time.

China's official media last week said trade between China and Africa would hit a record this year and stood at $115-billion as of the end of November.

China emerged as Africa's largest trading partner in 2009, outpacing the European Union and the United States, China's People's Daily said.

Shifting power
Bric has been seen as moving economic activity away from the established powers in Europe and North America and erecting a wall that limits their global power.

With sub-Saharan Africa's total economy growing from $322-billion in 2000 to $931-billion in 2008, according to the International Monetary Fund, it seemed that an African state would eventually join the group.

"This is more about perception and projecting Africa as the frontier market that it is, rather than the one that is ignored when talking about Bric," said Martyn Davies, CEO of Frontier Advisory and a specialist on African-Chinese economic ties.

"This will help South Africa project itself as a first tier emerging market rather than its current second tier status."

South Africa has been lobbying for some time behind the scenes to be granted Bric membership, officials have said.

Davies said South Africa could better earn a seat on economic merit if it can integrate the economies of the Southern African Development Community -- a 15-state regional block.

South Africa's rand has strengthened since it was invited to join Bric, partly in expectation of an inflow of funds from realigning Bric portfolios.

Zonis said the impact from capital inflows will be limited, and long-term gains will come from how well South Africa can use its Bric status to make itself more attractive for investment.

Eagles and nest
The Bric countries have sought greater clout for their grouping, holding a summit in Russia in 2009. "Bric" is a term invented in 2001 by Jim O'Neill, the chairperson of Goldman Sachs Asset Management.

O'Neill has said South Africa should not be included.

"How can South Africa be regarded as a big economy? And, by the way, they happen to be struggling as well," he said this month.

There are worries that as Bric takes on a life of its own, the listing of South Africa could prompt others to invite their friends to join, swelling membership and perhaps dooming the grouping to irrelevance.

Some have suggested the hard-charging economy of Indonesia may be a better fit, while global investment group BBVA has said the Bric concept itself has become outdated.

It has proposed a group called Eagles, short for "emerging and growth leading economies" it predicts will contribute about 50% of global growth over the next decade.

Its Eagles, as sorted by relevance, are China, India, Brazil, Indonesia, South Korea, Russia, Mexico, Egypt, Taiwan and Turkey.

South Africa was on a watch list of 11 other up and coming states dubbed the "Eagles Nest". - Reuters


http://www.mg.co.za/article/2010-12-29-sa-not-just-another-bric-in-the-wall

South Africa's accession to BRIC good for emerging economies: China

English.news.cn
2010-12-28 17:13:20

BEIJING, Dec. 28 (Xinhua) -- China on Tuesday said South Africa's accession to the BRIC, which currently includes Brazil, Russia, India and China, will boost cooperation between emerging economies.

"We believe that South Africa's accession will promote the development of the BRIC and enhance cooperation between emerging economies," Chinese Foreign Ministry spokesperson Jiang Yu told a regular briefing on Tuesday.

Jiang's comments came as the BRIC countries accepted South Africa as a full member of the group last week. China now holds the rotating chairmanship of the group.

Chinese President Hu Jintao had issued an invitation letter to South African President Jacob Zuma, inviting him to attend the third BRIC leaders' meeting to be held in Beijing next year, Jiang said.

She said cooperation among BRIC countries was stable, mutually beneficial, open and transparent.

BRIC is a term coined by Goldman Sachs economist Jim O'Neill in 2001 to describe the growing influence of large emerging economies


http://news.xinhuanet.com/english2010/china/2010-12/28/c_13667838.htm

We benefit the most so ag why not

It's bollocks.

I largely agree with the analysis of SA being essentially manipulated by China for African influence in turn for security and price of raw materials; much less so for markets - Africa is too poor and who else would Africa buy their cheap imports from anyway.

So they give us a pointless acronym and we grovel our thanks.

The only thing that should matter in SA economics is lifting the long term economic growth rate from 3 to 8+% and I see no relevance of this on that.

Happy new year!

To be manipulated(if we can use that logic for a second) by a Superpower in waiting,can only be good for the country.Go on SA make the most of it,I think history is on your side.

It's bollocks.

I largely agree with the analysis of SA being essentially manipulated by China for African influence in turn for security and price of raw materials; much less so for markets - Africa is too poor and who else would Africa buy their cheap imports from anyway.

So they give us a pointless acronym and we grovel our thanks.

The only thing that should matter in SA economics is lifting the long term economic growth rate from 3 to 8+% and I see no relevance of this on that.

Happy new year!

Clive3300, I dont think they need SA for that, they already buy all the raw materials too fuel their ever growing needs from Africa anyway.
China has some pressing issues, but at least its investing and trading with Africa, something the US or EU have failed too do so for many decades.
SA has too keep its eyes on the prize, and search for its own growth targets.
This decision promotes SA as Africas Superpower, and can only be beneficial.

Analysts sceptical over Bric invite
Jan 1, 2011 10:00 PM | By TSHEPO MASHEGO

The decision this week by the Chinese government to invite SA to join the Bric (Brazil, Russia, India and China) group of emerging countries has caught many analysts off-guard.

'China is after the country's resources, but another thing the Chinese covet is SA's political clout'

According to Chinese Foreign Ministry spokesman Jiang Yu, Chinese President Hu Jintao has invited President Jacob Zuma to attend the third Bric leaders' meeting to be held in Beijing this year.

Yet many analysts are sceptical about SA's suitability as Bric material.

First, the country's economy is only a quarter the size of the next-smallest Bric economy, Russia; second, SA's growth rate is pedestrian compared with the Bric average; and third, SA does not have the population of the other members.

"It's not a natural fit," said Razia Khan, Africa head of research at Standard Chartered.

Goldman Sachs Asset Management's chairman, Jim O'Neill, who coined the Bric phrase earlier this decade, was reported to have said: "While this is clearly good news for SA, it is not entirely obvious to me why the Bric countries should have agreed to ask SA to join.

"How can SA be regarded as a big economy? And, by the way, they happen to be struggling as well."

Lyal White, director at the Centre for Dynamic Markets at the Gordon Institute for Business Science (GIBS), was even more doubtful about the benefits of Bric membership.

"SA must not misunderstand the nature of Bric - it is an acronym dreamt up by orthodox banks based in the global north. Bric does not have development initiatives emanating from it, unlike the Ibsa (India, Brazil and SA) forum; rather it is a grouping about market and economic access.

"The reality is that there is very little consensus within Bric. For example, each country has a different growth path or policy, and there is no political will to deal with global issues such as the ensuing currency war.

"SA should realise that Africa is the future. We should focus on our competitive strengths and position ourselves as the 'gateway country' in Africa," he said.

Politicians, however, are adamant that SA's ascension to the big league of emerging markets is a portend of the new world order that is unfolding in the wake of the severe recession of recent years.

The SA government believes the decision is the key to unlocking further investments into the local economy, as well as solidifying the country's ambitions to be a central player in the emerging global landscape.

Department of International Relations and Co-operation Minister Maite Nkoana-Mashabane said: "The rationale for SA's approach was in consideration of a matter of crucial importance to Bric member states, namely the role of emerging economies in advancing the restructuring of the global political, economic and financial architecture into one that is more equitable, balanced and rests on the important pillar of multilateralism."

On Wednesday, Russian foreign minister Sergey Lavrov justified the decision saying: "The entry of SA, an active participant in the G20 and the largest economic power in Africa, will not only increase the total economic weight of our association, but also will help build opportunities for mutually beneficial co-operation within Bric."

The decision clearly makes more sense politically than economically. For SA it is seemingly part of a larger plan to join key global decision-making bodies, with the UN Security Council being the ultimate prize.

Dawie Roodt, chief economist at the Efficient Group, said: "China is after the country's resources, but another thing the Chinese covet is SA's political clout - the country, due to its history and its transition, commands a lot of global respect. SA definitely punches above its weight and this ascension to Bric will definitely add to SA's growing political clout.

"Bric represents the second tier of the most important countries. SA and Russia represent the commodity-producing countries, China is the manufacturing centre of the world, Brazil is the agricultural giant and India is the software and IT specialist. Therefore the countries each have their unique competitive advantages," he said.

Marvin Zonis, professor emeritus at the University of Chicago Booth School of Business said: "It is smart on the part of China to do this and it is also good for SA. It legitimises SA as a future global power and as an investable country."

Economically, the impact is already being felt in view of the significant strengthening of the local currency since the Chinese announcement.

The rand touched three-year highs against the US dollar on Thursday morning, trading below R6.60 to the US dollar. This brings its total gains against the dollar to over 30% since the beginning of 2009.

http://www.timeslive.co.za/business/article832044.ece/Analysts-sceptical-over-Bric-invite

^^ any view on this Jerome????

Personally i dont get what people are whinging about. Being left out of the group China would still be doing what it likes across Africa. With SA being in it it increases recognition of country and at least puts us at the same table. We already have our 3 way "alliance" with Brazil and India, this was merely a natural extention of that.

My take? Ok…

The world is made up of various economic and geopolitical tiers / poles / spheres of influences (and alliances, in some instances), some with overlapping membership. BRIC is not a political alliance. Nor is it an economic alliance. Rather, it's about creating a new geopolitical force / voice / sphere of influence to counter the traditional big economic players that have dominated the world post-World War II and post-Soviet Union break-up era: USA, Western Europe (and relatively recently, the EU), and Japan.

Excluding military alliances such as NATO and formal economic trade zones such as NAFTA, Eurozone, ASEAN, etc, in my opinion, these tiers comprise as follows:

TIER 1: USA (on its own); EU (as a collective); the UN Security Council (UNSC) [the permanent members in their collective capacity as UNSC members (i.e., US, Russia, China, UK, France)]; and most recently, BRIC (although BRIC lacks any cohesive policy as a bloc unlike the EU, its membership comprises 40% of the world's population, 25% of its landmass, and a combined PPP GDP of more than $18 trillion, which is greater than that of the US and EU individually; Its thus a significant grouping of nations that will represent an increasingly important geopolitical voice in the future).

TIER 2: G7 countries, G8 (G7 and Russia) + 5 (China, India, Mexico, SA, Brazil) countries, G20 countries

TIER 3: Regional superpowers (and exclusive geopolitical alliances): South America / Latin America: Brazil; South Asia: India; East Asia: China; Europe: Germany; Africa: South Africa; G77 countries, the NAM, [and arguably IBSA (India, Brazil, South Africa), and BASIC (Brazil, South Africa, India, China), both of which are formal alliances on a range of issues]

TIER 4: Regional powers: South / Latin America: Brazil, Mexico, Argentina; Southern Africa: South Africa; West Africa: Nigeria; North Africa: Egypt; East Africa: Kenya; Europe: Germany, UK, France; Asia: China, India, Japan

TIER 5: Sub-regional powers (but, in some instances, growing rapidly in influence): Asia: South Korea, Pakistan, Indonesia, the Philippines, Thailand, Australia (if you consider Oz as part of a greater Austral-Asian region; Oceania is too small to exist as its own bloc, in my opinion); Africa; Algeria, Morocco, Tanzania, Ethiopia; Europe / Middle East: Italy, Spain, Turkey, Saudi Arabia, Iran; South / Latin America: Venezuela, Columbia, Chile.

TIER 6, 7 ETC...


Not being part of BRIC leaves is where we are: at best, a Tier 3/4 power (a Tier 2 power, if you include our diluted G8+5 or G20 status). Jim O'Neill, the man who coined the term 'BRIC' may even argue that we're a Tier 5 power (or lower!).

Being part of BRICS elevates our status to a Tier 1 player, i.e., amongst the most influential countries in the world.

In short, I think we're better off with our new status, than without it. It elevates us to 'global player' status, and augers well for SA's aspiration to permanent UN Security Council membership, if the UN Security Council were to ever be reformed to include additional permanent members. Proposed reforms to the UN Security Council include Africa getting 2 permanent seats [probably without veto power though]. Currently, SA, Egypt, and Nigeria are lobbying / fighting behind the scenes for these possible seats. With SA's ascension to BRICS, our claim to one of these two seats is strongly reinforced, leaving Egypt and Nigeria to fight for the remaining one.

With BRICS membership, SA will also play a key role in reforming the world's financial system (which will hopefully translate to us getting more clout in the IMF and World Bank), and negotiating new global treaties (such as on climate change; in this regard, I hope we step up and provide actual leadership instead of largely going along with the untenable positions of other BRIC countries). However, whether SA's new BRICS status translates to more investment and jobs, we'll only know over the next 2 years. However, international fund managers already invest more in BRIC countries, so that could auger well for the JSE, and by extension, SA's economy.


Re: whether SA’s membership in BRICS is justified…

I think SA can make its BRICS membership count (and silence its detractors / critics) if it involves / represents its fellow 5-country Southern African Customs Union (SACU) and 15-country Southern African Development Community (SADC) members, the latter grouping of which represents roughly half of Africa’s landmass, a population of 234m (more than Russia and Brazil). In regard to the SACU, SA should push for the rand to become the formal common currency (it’s already the de facto legal tender in Lesotho, Swaziland, Namibia; also in Zimbabwe, which is not a member of SACU but a member of SADC, although Botswana will push back purely on grounds of national pride, not financial logic).

http://upload.wikimedia.org/wikipedia/commons/thumb/a/a9/SADC_and_SACU.PNG/300px-


The SADC already formed a free trade agreement with the 5-country East African Community (EAC - population: 125m; PPP GDP of $105bn) and 20-member Common Market for Eastern and Southern Africa (COMESA – population: 406m; PPP GDP of $736bn) to form the Africa Free Trade Zone (these economic blocs have over-lapping membership). SA is easily the giant, by a long shot, of this combined zone and, by extension, its de facto leader. As such, in my opinion, SA’s membership in BRICS is justified.

Other BRIC wannabes (such as South Korea, Turkey, Indonesia, and Mexico) can’t claim to represent anything close re: population and geographic area. In time, the Africa Free Trade Zone, through SA, should reach out to join forces with the Economic Community of Western African States (ECOWAS), the Economic Community of Central Africa States (ECCAS), and ultimately, seek to encompass the entire 53-member African Economic Community (EAC - estimated population: 1 billion; PPP GDP $2 trillion).


Africa deserves a presence at a Tier 1 level and BRICS is a means to this end. Currently, SA is the best country to represent COMESA, and arguably, the rest of Africa too. Thus, our BRICS membership is fully justified.

In summary, I think BRICS will herald (it already is doing so) a multi-polar world vs the current unipolar (US/Western Europe) or bi-polar (US and EU).

Sorry for the somewhat long post but you asked for my views on this issue. :)

^^I also believe one of the key considerations for the BRIC countries in inviting SA has to do with the repidly devaluing dollar. In the near future calls to replace the dollar as reserve currency will grow more and more shrill as the US government continues debasing their currency, countries cannot conduct international trade in a continously devaluing currency.

Any new replacement reserve currency (basket of currencies) will require the rand in it, the Rand is rapidly becoming a 'Hard Currency' and it will be the de facto African currency or the basis of any 'Afro'. Thus having a curency such as the Rand being part of any replacement reserve currency will give the new 'Bric Curency' legitemacy and depth.

The implications are quite profound, a strong Rand, i.e R3 to the dollar will change South Africa from being a resource exporting economy to an industrialised advanced economy...

^^The Rand has reached parity with the once powerful Botswana Pula:)

So we are now teh strongest currency in Africa? :D

^^possibly, it might be best to check facts before we go on an all out assault on our African friends in Oasis:)

No. To my knowledge, at least 5 African currencies are stronger:

Libyan dinar (1ZAR = O.18 Lib dinar)
Tunisia dinar (1ZAR = 0.22 Tun dinar)
Ghana cedi (1ZAR = 0.23 Gha cedi)
Sudanese pound (1ZAR = 0.38 Sud pound)
Egyptian pound (1ZAR= 0.88 Egy pound)

However, the rand is the most traded African currency, by far. A few years ago it ranked as the 7th most traded currency in the world, and the most actively traded developing country currency in the world, after the Singapore dollar [I don't think Singapore should be classified as a developing world country].

S. Africa adds new momentum to BRIC mechanism
English.news.cn
2011-01-02 19:55:21

BEIJING, Jan. 2 (Xinhua) -- South Africa's entry into BRIC at the end of 2010, without doubt, would promote the group's prominence in the world and boost cooperation among emerging economies, analysts and media said.

However, they said South Africa needs to exert greater efforts to develop its own economy in order to play a bigger role in mitigating the world economy's imbalances together with BRIC countries -- Brazil, Russia, India and China.

After South Africa's joining, BRIC was renamed as BRICS.

BRIC's acceptance of South Africa as a full member was a mutually beneficial and strategic choice, South African media said.

"We believe that South Africa's accession will promote the development of BRIC and enhance cooperation between emerging economies," Chinese Foreign Ministry spokesperson Jiang Yu told a briefing on Tuesday.

Chinese President Hu Jintao had issued an invitation letter to South African President Jacob Zuma, inviting him to attend the third BRIC leaders' meeting to be held in Beijing in 2011, Jiang said.

She also said cooperation among BRIC countries was stable, mutually beneficial, open and transparent.

Brazil's leading newspaper Folha de Sao Paulo said the trend that emerging economies and developing countries serve as new engines for world economic growth, with South Africa's entry into BRIC, would become more prominent.

Developing countries would play a bigger and more positive role in realizing prosperity of the world economy, it added.

Some Indian experts said South Africa's joining would not only benefit cooperation among BRICS countries, but be conducive to the economic development of Africa and even the world.

Russia's Foreign Ministry said Wednesday that South Africa's entry was "in line with sustainable trends of global development, including the emergence of a polycentric international system."

"The entry of (South Africa), an active participant in the G20 and the largest economic power in Africa, will not only increase the total economic weight of our association but also will help build up opportunities for mutually beneficial practical cooperation within BRIC," the ministry said.

However, some new problems also emerge with the enlargement of BRIC.

South Africa's Pretoria News newspaper recently said the country's trade growth far lags behind BRIC countries, adding South Africa needs to strengthen cooperation with them in order to play an important role in boosting ties between Africa and them.

Andrie Pineri, a researcher of Brazil's Institute of Applied Economic Research, told Xinhua recently that South Africa's entry into BRIC surely would boost the group's influence in the world economy.

However, Pineri said emerging economies need to more closely arrange their cooperation timetable to lessen the long-term North-South gap and reduce the world economy's imbalance

http://news.xinhuanet.com/english2010/indepth/2011-01/02/c_13674385.htm

Korea 'Would Make Better BRIC Member Than S.Africa'

Goldman Sachs Asset Management chairman Jim O'Neill, who first coined the acronym BRICs for Brazil, Russia, India and China to refer to the emerging economic giants, said Korea is a more suitable candidate than South Africa to join them, Bloomberg reported Wednesday.

The BRICs have named South Africa as a member at their annual summit and invited South African President Jacob Zuma to attend the next meeting in Beijing in April. O'Neill published an investment report released last week and in which he apparently tried to introduce the less immediately appealing acronym "MIKT" for Mexico, Indonesia, Korea and Turkey as representing fast-growing emerging economies which will lead global growth next year.

In another report published in London on Tuesday, O'Neill said, "It is tough to see how South Africa matches up to these four countries, never mind the BRIC countries."

According to the World Bank, the GDP of South Africa as of the end of last year is US$286 billion, less than half of Korea's $832.5 billion, Turkey's $617.1 billion and Mexico's $874.9 billion. It is two-thirds of Indonesia's $540.3 billion.

englishnews@chosun.com / Dec. 31, 2010 12:19 KST

http://english.chosun.com/site/data/html_dir/2010/12/31/2010123100860.html

South Africa admission into BRIC: Jim O'Neill and Oppositions should see the light
Source: Emeka Chiakwelu

Business & Finance Summary: Jim O'Neill, Chairman Goldman Sachs Asset Management, misread the tea leaf that South Africa will not be accepted into BRIC because of her relatively small population of 50 million and $287.2 billion GDP. But population is not everything as it has been proven with the entrance of South Africa into BRIC. South Africa a gateway to Africa is the largest and most developed economy in Africa. With relatively less corruption and with strong democratic standing coupled with durable civil and social infrastructures makes SA attractive to BRIC.

Jim O'Neill of Goldman Sachs, who coined the term BRIC, was not reacting favorably on the formal invitation of South Africa to join BRIC. The invitation was extended to South Africa by China a member of the BRIC. These nations named BRIC comprises of Brazil, Russia, India and China. The BRIC are the largest and most powerful emerging economies.

Even before South Africa was invited to join BRIC, Jim O'Neill read the tea leaf incorrectly and made the prediction that South Africa was not the right candidate for BRIC membership. He further predicted that Nigeria will make it to BRIC before South Africa. Both of his predictions never materialized and the grip he thought he has on BRIC was waning. Now he is sounding like he knows what is more important to the BRIC than the member nations.

Jim O'Neill did not waited for the ink of the invitation card for South Africa to dry before he commenced to give every reason why South Africa is not the justifiable candidate to make it to BRIC. He made the claimed that South Africa was invited for political reason and not economics. His words: "When I created the acronym, I had not expected that a political club of the leaders of the Bric countries would be formed as a result. In that regard, the purposes of the two might be regarded differently." This statement makes him to sound like a mercantile economist of 18th century. Jim O'Neill needs to take a class in political economy and to review Adam Smith's Wealth of a Nation. He should come into 21st century and understand the prevailing and the emerging state capitalism. Politics has never been divorced from economics in 21st century capitalism.

Jim O'Neill commented on the GDP of South Africa which is about $287 billion and said, that South Africa economy is “quite small by not only BRIC standards, but compared to some others. For example, Russia is around $1,600 billion, nearly 5 times larger than South Africa. And, India is currently similar in size to Russia. Brazil is currently closer to $2,000 billion in size, while China is considerably larger at around $5,500 billion.” His omission is that South Africa has a great potential and it is a gate way to Africa. Looking at the GDP of South Africa will not tell you the whole story about the country. The country is natural resources-rich and Africa has a vast arable soil for cultivation and agriculture. Moreover, South Africa's debt-to-GDP ratio 29.50 % is among the lowest in the country's category compared to Greece with debt-to-GDP ratio of 125 %.

All those raising voices on South Africa invitation into BRIC do not know more about South Africa than China that made the invitation. The China knows about her interest and where it lies and she is willing to protect her interest. Before China sends out invitation card to South Africa she has done her home work and has contacted rest of the BRIC members. What Jim O'Neill and his opposition camp should have done is to ask the BRIC members why they think that South Africa is the most suitable for membership.

On the population size of South Africa that prompted an initial reason for Jim O'Neill for not rooting for the relatively smaller South African population of 50 million. South Africa can easily increase her population by opening door to willing African neighboring countries to migrate into her country.

Mr. Emeka Chiakwelu is the Principal Policy Strategist at Afripol. Africa Political & Economic Strategic Center (AFRIPOL) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.

Source: http://www.afripol.org/afripol/item/220-south-africa-admission-into-bric-jim-o%E2%80%99neill-and-oppositions-should-see-the-light.html

^^I also believe one of the key considerations for the BRIC countries in inviting SA has to do with the repidly devaluing dollar. In the near future calls to replace the dollar as reserve currency will grow more and more shrill as the US government continues debasing their currency, countries cannot conduct international trade in a continously devaluing currency.

Any new replacement reserve currency (basket of currencies) will require the rand in it, the Rand is rapidly becoming a 'Hard Currency' and it will be the de facto African currency or the basis of any 'Afro'. Thus having a curency such as the Rand being part of any replacement reserve currency will give the new 'Bric Curency' legitemacy and depth.

The implications are quite profound, a strong Rand, i.e R3 to the dollar will change South Africa from being a resource exporting economy to an industrialised advanced economy...

No. To my knowledge, at least 5 African currencies are stronger:

Libyan dinar (1ZAR = O.18 Lib dinar)
Tunisia dinar (1ZAR = 0.22 Tun dinar)
Ghana cedi (1ZAR = 0.23 Gha cedi)
Sudanese pound (1ZAR = 0.38 Sud pound)
Egyptian pound (1ZAR= 0.88 Egy pound)

However, the rand is the most traded African currency, by far. A few years ago it ranked as the 7th most traded currency in the world, and the most actively traded developing country currency in the world, after the Singapore dollar [I don't think Singapore should be classified as a developing world country].

The "strength" of a currency against the Dollar is silly tool to try and use to compare strength of a country. The strengthening Rand is actually more of a problem and hindrance to growth of the country. Yes its great for people like me that travel overseas alot as it makes it far cheaper to do so currently, but it completely kills our international competitiveness for our manufactured goods and the sale of our minerals as they are all Dollar based pricing.

To look at currency strength you need to look at PPP not just what the rate is.

Exactly. We actually need a weak rand to be competitive with our BRIC partners (and other countries) since we have an export-based economy. A strong rand means, amongst others, our manufacturers become uncompetitive, company tax revenues from foreign exports (incl from mining) will be lower when converted to rands, and our tourism industry becomes expensive to foreigners (esp since we're a long-haul destination and it's an effort just to get here).

The rand should ideally be trading at R8.50-9.00 / USD. However, then the oil price rises, and that will have a knock-on effect on local fuel prices, inflation etc.

I don't think a weak rand is good for the locals.

Our economy's inflation seems to be tied to the currency: A strong Rand = a low inflation rate, and a weak rand = a high inflation rate.

I think this comes down to oil price (in addition to wheat being priced in dollars, etc). A weaker currency means we pay more for fuel, which is passed on to to every other goods in our country, hence our purchasing power drops and more people fall into the poverty bracket.

Not to mention, the increased inflation leads to higher interest rates, and again that makes us poorer in the long run.

Just my 2 cents, I am clueless when it comes to Economics :) I just prefer a stronger rand due to the above laymen observations.

this strong rand is killing me with USD capital inflows to SA. the BoE clever okes say its natural level is R8:50-R9 as it allows us to compete against other emerging economies espcially those in BRIC which we compete against (russia for gold, Brazil for iron ore, India for outsourcing and china for manufactured good as examples).

strong / week dollar is not linked to inflation which is a function of capital inflows and local intrest rates driven by international governmnet borrowing etc

but the simple logic of pushing rates up to cool (inlfation) a economy and drop them to heat it up are true hese historically low rates which are slightly higer than the other BRIC countries at present (based on their biger economies and slightly more mature fiscal policies)

I don't think a weak rand is good for the locals.

Just my 2 cents, I am clueless when it comes to Economics :) I just prefer a stronger rand due to the above laymen observations.

Laymen are often more insightful than experts, I believe it is economic suicide to base SA's fortunes on a weak currency. Was the SA economy not stronger when the Rand was stronger than the dolalr, apartheid and sanctions notwithstanding SA in the 60's,70's and 80's built the most advanced infrastructure that's lasted till today, albeit creaking somewhat.

It is my fervent hope and wish that the Rand continues strengthening to back where it was in the 60's: ZAR1 = USD1.25

Benefits of a strong rand

Manufacturers


cheaper capital goods
can import technical skills not available in SA cheaper
cheaper raw material inputs, this fact is borne out by Aluminium producer Hulamin, its making good profit margins because its key input has plummeted in Rands
Makes manufacturers concentrate on productivity and not flase-productivity


Miners


Importation of massive mining equipment such as drills, CAT equipment, etc becomes much cheaper
Chemicals needed in mining can be imported cheaper


GOVT

Can borrow at low cost to build infrastructure
Can buy military equipment cheaper
For R&D purposes we can now import super-computers, electron microscopes, etc much cheaper


Lastly the people who benefit the most are ordinary citizens


things are cheaper for everyone, overseas trips for Dysan and his ilk are cheaper, Maize and taxi fare(petrol) are cheaper for Nostra and his ilk
That Ipad, Iphone and flat-screen,3D LED platinum frame 55" monster TV is now cheaper


Most importantly it keeps inflation under control and thus SA wealth is not eroded. I cannot think of any 'real' benefits of a weak currency...

Laymen are often more insightful than experts, I believe it is economic suicide to base SA's fortunes on a weak currency. Was the SA economy not stronger when the Rand was stronger than the dolalr, apartheid and sanctions notwithstanding SA in the 60's,70's and 80's built the most advanced infrastructure that's lasted till today, albeit creaking somewhat.

It is my fervent hope and wish that the Rand continues strengthening to back where it was in the 60's: ZAR1 = USD1.25

then you are not an export based economy see china for example of keeping currency artificaly low to benifit from exports. If the rand is at that level then good bye SA mining and manufacturing secor as imports will flood us and we wont be able to sell anything as we are too expensive

all I can say is thank god you are not in charge of economic policy, you sort of have a bob mugabe view of economics.

Funny how every single expert to a person has exactly the opposite view of yours

all I can say is thank god you are not in charge of economic policy, you sort of have a bob mugabe view of economics.

Funny how every single expert to a person has exactly the opposite view of yours

I am at the opposite end of Bob Mugabe economics, he believes in currency printing, I abhor currency printing or so called 'quantitative easing'. He belives in false-productivity, I believe in training and technology as a base for an economy, he actively discourages FDI, I love FDI and western imperialists as long as they put that money up...

Just because all the experts are now lemming-like extolling the virtues of paper currencies does not make them right. Shoot the experts at one time also belived the world was flat and the sun orbits the earth not the other way around.
Maybe the experts are just stupid and they're too scared to interogate issues more rigorously.

that must be it, all those MBA and PHDs must be worthless compared to your experince

that must be it, all those MBA and PHDs must be worthless compared to your experince

Mugabe has more degrees than you can shake a stick at, does that make him right? With all due respect mate stick to your day job, economics is clearly not a strength of yours...

nor your by the looks of things

and the MBA's and PHD's I refer to are from the brightest people who have studied economics and who are in the industry. I take advise from a PHD at BoE, seems right on just about everything in the past 10 years so I guess he must be a dumbass then

and the MBA's and PHD's I refer to are from the brightest people who have studied economics and who are in the industry. I take advise from a PHD at BoE, seems right on just about everything in the past 10 years so I guess he must be a dumbass then

PHD's are no gurantee against being wrong. Sh*t Bush was touted as the first US president with an MBA (a Yale one at that) and see what a f@rk up he's been.

The guys who started Long-Term Capital were Nobel Prize winners in economics and yet their so-called PHD's couldn't do squat as their company imploded and imperilled the US financial sector.

No thanks, I'll take common sense over a PHD anyday...

and so do half the world best doctors, business people etc. whats your point?

we are happy with a strong rand. We signed a telecoms contract in late October 2010 that required us to fork out $250k with an overseas partner. We have saved $20k in just 60 days since we signed this. I am glad i pushed for an extension to pay in Jan 2011.

^^You still struggling to get my point after all my posts? Ok one more time, my central argument is:

Just because you have a PHD does not mean you know everything in fact you can be wrong. I then gave exmaples of people with PHD's and MBA who've cocked up on an epic scale.

In relation to Economics my argument is that:

The study of economics has been reduced to an ideological battlefield unlike politics, objectivity/pragmatism is no longer a central tenet. As an example nowadays especially in the States, there's an wide-spread ideological opposition to the legitimacy of the State as an economic actor, Americans have forgoten the investments that was made by their govt and which enabled them to be a super-power. Hence just because most 'experts' think a weaker currency is a panacea just because a PHD in the US reserve bank is pursuing this policy, still does not make the policy right. Capiche?

we are happy with a strong rand. We signed a telecoms contract in late October 2010 that required us to fork out $250k with an overseas partner. We have saved $20k in just 60 days since we signed this. I am glad i pushed for an extension to pay in Jan 2011.

Kulani you beauty! This gentleman right here, is a practical benefit of the rand, now multiply the savings that Kulani is talking about a thousand-fold and you get why I'm such a fanatic about a strong curency.

Kulani aren't you guys active in Africa? Aren't you scared your services/goods you sell in Africa will not be more expensive as the rand gets stronger? What are you planning on doing to mitigate the 'currency risk'?

no capiche, I sell wine overseas and the strong rand is killing us. we are being undersold by other emerging and matures markets (Chile and Oz). like the mines we rely on exports , in fact 2 million south african are directly employed in the mining sector, cant sell ore cos its too expensive thats 2 million out of work. like wise for our agricutural sector, you think those apples and oranges from Sa will hit the shelves with the rand at 5 :1? or will the sell better with teh rand at 8:1?

Come on and smell the coffee, who gives a shit about PHD's and you long words when you have unemployment at 30% in a country that relies on forex created by exports.Its got nothing to do with the US, Bush, you view of the world or any of that, its got to do with common sence, a weak rand drives exports against our competition for limited sales in the world, a strong rand kills us and we dont export, we have higher unemployment and your nice analogy that we can by weapons cheaper is idiologist at best and nieve at worst and plain stupid if you ask me.The PHD's I talk about are economist in Sa understanding local issues in a global enviroment. you just go back to yout text books and see how much that helsp you in teh real world.

FYI, I spend 13 years as either CEO or diretor of real estate investment and development companies globally including 4 years with a PE firm. You still think I dont know my beans from eggs?

Guys, please leave the mines too Julius Malema, he knows best:banana:

^^So as a result of your wack management skills you want us all to take a haircut because you want to restore your margins? GTFOH

and Bob Mugabe knows best about agriculture and production

what margins???
grow up you dick, you know nothing and try to make out loads, you are bearly out of school and yet profess to be an economic guru just becasue you are a journalist. Whos taking haircuts the millions employed in our 3 largest sectors of manufacturing, mining and agriculture who are all export based?

get a job, get into the real SA economy and its not about protecting margins , its about staying afloat and staying in business and keeping hundreds employed. You ficking twat it because of people like you that we are up shit creak with fiscal policies that reward populist sentiment by uneducated people who swallowd a text book in the moring and are global economic experts by lunch. If my farm goes so do aporx 100 jobs, geeze what a total fucking wanker.
Thats why I have a second job so my farm doest go under and people loose their jobs, chirst I wish we could make money in farming at the moment but exports are being killed by your type of logic of a strong rand.

But as long as you can have your Ipad, Iphone and flat-screen,3D LED platinum frame 55" monster TV then I supose millions unemployed is OK

Benefits of a strong rand

Manufacturers


cheaper capital goods
can import technical skills not available in SA cheaper
cheaper raw material inputs, this fact is borne out by Aluminium producer Hulamin, its making good profit margins because its key input has plummeted in Rands
Makes manufacturers concentrate on productivity and not flase-productivity


Miners


Importation of massive mining equipment such as drills, CAT equipment, etc becomes much cheaper
Chemicals needed in mining can be imported cheaper


GOVT

Can borrow at low cost to build infrastructure
Can buy military equipment cheaper
For R&D purposes we can now import super-computers, electron microscopes, etc much cheaper


Lastly the people who benefit the most are ordinary citizens


things are cheaper for everyone, overseas trips for Dysan and his ilk are cheaper, Maize and taxi fare(petrol) are cheaper for Nostra and his ilk
That Ipad, Iphone and flat-screen,3D LED platinum frame 55" monster TV is now cheaper


Most importantly it keeps inflation under control and thus SA wealth is not eroded. I cannot think of any 'real' benefits of a weak currency...

Dude what you do not get is this:

A strong Rand will without a doubt mean that the vast majority of South Africans that offer no skills to the country will be out of their low-skill jobs and unemployed because they are already much more expensive and less productive than their counterparts overseas, now they will be much more expensive. Fire the lot and import will be the solution.

I honestly think you live in fantasy land

what margins???
grow up you dick, you know nothing and try to make out loads, you are bearly out of school and yet profess to be an economic guru just becasue you are a journalist. Whos taking haircuts the millions employed in our 3 largest sectors of manufacturing, mining and agriculture who are all export based?

get a job, get into the real SA economy and its not about protecting margins , its about staying afloat and staying in business and keeping hundreds employed. You ficking twat it because of people like you that we are up shit creak with fiscal policies that reward populist sentiment by uneducated people who swallowd a text book in the moring and are global economic experts by lunch. If my farm goes so do aporx 100 jobs, geeze what a total fucking wanker.
Thats why I have a second job so my farm doest go under and people loose their jobs, chirst I wish we could make money in farming at the moment but exports are being killed by your type of logic of a strong rand.

SA Boy, do you export to Europe? If so, tell me the brand, I want to buy a bottle.
Nostra, not too pick sides here, but SA Boy is correct, how do you want too export when your currency is higher, thus your products become more expensive to your potential buyers, thus your rivals can export at a much more competitive price. I think this is basic economics.

A strong rand means we become more uncompetitive. That means more jobs get lost in the manufacturing, textile, mining, agro, and even the tourism sectors (amongst others). Job losses translate to more poverty, which is what SA doesn't need. Why do you think COSATU has been pushing so hard for a weaker rand these past few months? Thousands are losing their jobs monthly in all sectors because of the rand's strength. For every company that may benefit from a strong rang (for example, Kulani's company), there are 1,000 that suffer because of it.

Also, government revenue falls (from lower company tax etc) with a strong rand as overseas export profits converts to fewer rands. Plus a shrinking labour force translates to less direct taxation (PAYE) and less indirect taxation (VAT etc), the latter, because people are spending less as they lose their jobs and tighten their purses. Less money in government coffers translates to less spending on infrastructure and higher budget deficits (which, in turn, means more government borrowing / debt). We don't want these things!

We don't need weak rand [for example, R10-R12/USD], just a competitive rand [R8,00-9.00/USD).

Its ok guys as long as Nostra can buy his Monster Platinium LCD TV its all right. Im sure Nostra and his sidekick in logic, Julius "Mr Woodwork" will not bother with reality gained by generations of clever people who have learned from each passing genration the principles of sound economic understanding when they are drinking their congac and flashing their breitlings.
Every economist , black and white, PHD or not, MBA or not, Government or private all agree that a weaker rand is more benifitial to the strategic intrest of the country, hell even COSATU can see it, but I supose some people just dont get sound logic and overwhelming evidence to the contray.

what margins???
grow up you dick, you know nothing and try to make out loads, you are bearly out of school and yet profess to be an economic guru just becasue you are a journalist. Whos taking haircuts the millions employed in our 3 largest sectors of manufacturing, mining and agriculture who are all export based?

get a job, get into the real SA economy and its not about protecting margins , its about staying afloat and staying in business and keeping hundreds employed. You ficking twat it because of people like you that we are up shit creak with fiscal policies that reward populist sentiment by uneducated people who swallowd a text book in the moring and are global economic experts by lunch. If my farm goes so do aporx 100 jobs, geeze what a total fucking wanker.
Thats why I have a second job so my farm doest go under and people loose their jobs, chirst I wish we could make money in farming at the moment but exports are being killed by your type of logic of a strong rand.

But as long as you can have your Ipad, Iphone and flat-screen,3D LED platinum frame 55" monster TV then I supose millions unemployed is OK

Faak you buddy! Who the faak you calling a dick? You got a nerve mofo. You wanna act like some spokesperson for the poor, yet you were the one who's adamant that you only fly business class, not low cost. That right there is the first place you can cut costs, start flying cattle-class and then come talk to me that you've tried everything to reduce costs in your business. Anyways I'm done with you, you think aggression and insults are good debating skills.

For the other guys actually claiming that a weak rand is beneficial to the poor, all I can ask is please do tell me how is more expensive food, taxi fare (these two make up the largest expenditure of the poor) and clothing beneficial to the poor? How is more expensive electronics more beneficial to the middle class?
In as much as I can now afford to buy the Golf 6 GTI because of the strong rand, firms and mines can also buy the capital/equipment equivalent of the G6 GTI and even better.

A weak rand does not benefit manufacturers, period! This point has been proven empirically. Please google Adrian Saville, the CIO at Canon Asset Management he's done some comprehensive research and his conclusion is that historically there is a negative relationship between manufacturing
Lastly our constitution in its wisdom obliges the govt to protect the buying power of our currency, meaning it has to keep the currency strong.

I rest my case.

Also, government revenue falls (from lower company tax etc) with a strong rand as overseas export profits converts to fewer rands. Plus a shrinking labour force translates to less direct taxation (PAYE) and less indirect taxation (VAT etc), the latter, because people are spending less as they lose their jobs and tighten their purses. Less money in government coffers translates to less spending on infrastructure and higher budget deficits (which, in turn, means more government borrowing / debt). We don't want these things!


You're wrong, a strong rand leads to low inflation and thus govt revenue increases dramatically because inflation is low and consumer spending is robust thus higher VAT receipts and higher paye as more ppl are employed. For proof look at the econony's performance after the rand recovered from it's 2001 crash.
And govt debts come down because a stronger currency reduces the real cost of foreign debt.



I really feel like Alice in Wonderland right about now...

You're wrong, a strong rand leads to low inflation and thus govt revenue increases dramatically because inflation is low and consumer spending is robust thus higher VAT receipts and higher paye as more ppl are employed. For proof look at the econony's performance after the rand recovered from it's 2001 crash.
And govt debts come down because a stronger currency reduces the real cost of foreign debt.



I really feel like Alice in Wonderland right about now...

The economies strength after the 2001 crash is more proof of a weak currency helping growth than that of a strong currency. cause and effect dont run concurrently.

For an economy to grow you need cash inflow from outside , this either comes from FDA or exports . Since the FDA South Africa recieves is mostly short term this has little or no positive effect on growth and thus we rely on exports for robust growth . Exports directly benefit from a weak rand . The whole reason we went into recession was because we had no buyers for our goods.

Umm, you guys are getting all bent out of shape. There are benefits to both a strong and a weak rand. Simple.

And how much this works one way or the other depends on how (the govt) react to the strengthining of the currency. On a macro level.

At a more molecular level, same thing. A small exporter will not want to see the currency strengthen in most cases (but also depends on how the business is structured - in some cases it could be beneficial).
A small importer will not want to see the currency weaken - etc.

But by all means, keep up with the insults - otherwise I have nothing amusing to read, and I will actually have to do some work...

you started the insults sunshine.

dude you are so out of touch , you must be alice cos you are looking through the wrong glass .

Who is spokesmen for the poor, deffinatly not you and you LCD TV and Ipods? I simply stated that my farm employes people and if I cant export then I have no farm and then they have no jobs .

As for my flight preferences they have nothing to do with the farm its a perk Ive earned with my other job I have to keep the farm running.if I dont fly how i fly it has no bearing on my farm.

dont get you logic about a golf when its made in RANDS?

I grew up with Adrian and know him well and respect his views, however from my discussions with him when he did investments for me in Durban many many years ago, a stong rand is a problem for an export based economy (mining and agriculture are also export sectors), dont think the principle of this has changed.

You are berley out of school and really havent even seen much of life so your opinions are really baseless. You have no idea about working for 20 years in the real world and paying taxes and employeing people who rely on you for their lively hood. It scares me that people like you still think like this, ah well that mother nature I supose , someone had to draw the short stick

For the other guys actually claiming that a weak rand is beneficial to the poor, all I can ask is please do tell me how is more expensive food, taxi fare (these two make up the largest expenditure of the poor) and clothing beneficial to the poor? How is more expensive electronics more beneficial to the middle class?
In as much as I can now afford to buy the Golf 6 GTI because of the strong rand, firms and mines can also buy the capital/equipment equivalent of the G6 GTI and even better.

Everything you have written above shows just how clueless you are bud. Food, taxi fare and electronics will be the last thing on their minds when they lose their job because the factory they are working in closes down and they now get no money!!

South African Government (Pretoria)

South Africa: Nation Takes Up Its Seat on the United Nations Security Council
5 January 2011

South Africa on 1 January 2011 began its second term as a non-permanent member of the United Nations Security Council for the period 2011 and 2012. South Africa will serve alongside the Permanent Five members, China, France, the Russian Federation, United Kingdom and United States and elected members Bosnia and Herzegovina, Brazil, Colombia, Gabon, Germany, India, Lebanon, Nigeria and Portugal.

South Africa in the conduct of its international relations is committed to garner support for our domestic priorities; to promote the interests of the African Continent; to promote democracy and human rights; uphold justice and international law in relations between nations; seek the peaceful resolution of conflicts; and promote economic development through regional and international co-operation in an inter-dependent world. We also strongly believe in the concept and practice of good governance, as one of several important tools and instruments at the disposal of nations in their conduct of world affairs.

In pursuance of these principles, the South African Government adheres to and strongly supports a multilateral, rules-based system. We approach our membership of the Security Council from the premise that the United Nations remains the most appropriate forum for addressing international challenges in the maintenance of international peace and security, which are best served through collective co-operation.

These principles will guide our actions, as we discharge our responsibility, alongside the other members of the Security Council, to make a meaningful contribution to peace, security and development, not only on our Continent, but globally. To this end South Africa will forge close partnerships and promote greater consultation with the other members of the Security Council in the conduct of its work.

Whilst the above principles and values that guide our international work are strong and sustainable we are cognizant of the fact that actual implementation is sometimes not straight forward. The environment in which we will be operating namely the Security Council is the body which has powers beyond any other. The power configuration is not in favour of the non permanent members and national interests sometimes override international commitments. The unfair use or abuse of diplomatic tools at members’ discretion can make the work of the Security Council very difficult.

For the first time the configuration of the Council in 2011 will reflect the membership of a potentially reformed Council. In addition to the Permanent Five, we will have the so-called Emerging Powers, some of which aspire to Permanent membership, as well as IBSA and BRICS represented in the Council. South Africa and Nigeria will at the same time also be members of the African Union Peace and Security Council, presenting a unique opportunity to bring greater alignment to the work of these two bodies regarding conflict on our Continent. South Africa will seek to strengthen co-operation between the G3 (Gabon, Nigeria and South Africa) in the Council, with the aim of elevating the African Agenda and the achievement of peace and security on our Continent and to coordinate efforts in this regard more efficiently. This is important in a Council where influence is unevenly distributed and certain members play a dominant role.

South Africa will continue its efforts to promote and enhance the Security Council’s cooperation with regional organizations, particularly the African Union’s Peace and Security Council. Closer co-operation between these two bodies will contribute to enhancing the convergence of perspectives and approaches in dealing with and responding to peace and security challenges on our Continent.

South Africa will actively contribute to the work of the Security Council by participating in its committees, working groups and other structures. These bodies assist the Council to explore issues in greater depth and to monitor and facilitate implementation of its decisions. In 2011, South Africa in line with its foreign policy priorities, will chair the 1540 Committee dealing with weapons of mass destruction and non-state actors and the Working Group on Conflict Prevention in Africa. South Africa will also serve as Vice-Chair of the Côte d’Ivoire and Liberia Sanctions Committees.

Security Council membership will also present an opportunity to contribute to reforming the working methods of the Security Council and to work towards the achievement of a representative, legitimate and more effective Security Council. Through our daily interactions with the P5 and other Council members, we will attempt to persuade and convince them of the need for the early conclusion of the reform process.

During our membership of the Security Council we will be cognizant of the Charter mandated roles of the different UN principal organs. We will continue to assert that the Security Council, which is entrusted with the maintenance of international peace and security, is but one of these albeit the most important one, because it may authorize the use of force. We will continue to assert the role of the other principal organs, such as the General Assembly, the Economic and Social Council and the International Court of Justice and argue for vigilance in the Security Council usurping the mandates of these other organs. We remain aware that the formation of major power groupings will contribute to the quality of work that the Security Council will produce.

In our membership of the Council for 2011 and 2012, we will build on our achievements and lessons learned during our first term in 2007 and 2008. We will use the opportunity to consolidate the gains made during this term, but also be aware of the changes we need to make to improve our work to respond effectively to the global issues and challenges facing us.

South Africa will be serving in the Council at a time of great challenges, amongst them the holding of a referendum in Southern Sudan, the crisis in Somalia and Côte d’Ivoire, debates on the Iranian nuclear programme, the situation in the Middle East, including the Palestinian question and the drawdown or exit of UN peacekeeping operations.

In the attainment of its objectives in the Security Council, Government will be consulting widely with all stakeholders on how South Africa’s participation at the Security Council can be enhanced and will take steps to ensure that our public is kept informed.


http://allafrica.com/stories/201101050848.html

Added 05/01/11
Overseas investors eye up South African property

South Africa has been formally asked to join the BRIC group of major emerging markets, including Brazil, Russia, India and China.

South Africa’s inclusion into what will now be referred to as BRICS will commence in 2011.

Even prior to the BRICS announcement, South Africa has been enjoying a surge in property investment from overseas property investors looking for good returns.

According to the Sage Property Report in September 2010, from the Standard Bank, one of the largest banks in Africa, ‘confidence in the South African property market is returning’.

This is confirmed by the 8.3 percent y/y growth rate in the median property prices in August and 7.3 percent y/y in July.

The tide may have turned generally for property values but they weren’t in any particular jeopardy in the first place in high value areas. Despite the recession, Clifton, which is rated the top suburb in South Africa, saw prices rising by 48 percent last year to an average of R16.2 million, according to an article in The Financial Mail in July 2010.

A decade ago, property developers Lace Market Management, originally formed in the United Kingdom in 1991 and operated by brothers David and John Higginson, has focused its attention on exclusive developments particularly in Camps Bay.

David said: “We came here 10 years ago, fell in love with the Cape and wanted to spend time here. As property investors, this location and lifestyle would have been the ultimate buy for us when we came here in terms of investing money, getting a return and getting usage.”

The brothers now manage EbbTide, a range of self-catering apartment for overseas visitors and the well-heeled Gauteng market. The EbbTide apartments are priced between R10million and R17.5 million and designed to operate as either self-catering luxury apartment businesses or as homes, or a combination of both.

Property investors purchasing one of the two or three-bedroomed apartments are offered a guaranteed 8 percent return on investment for the first two years.

David Higginson said: “You get R800 000 in the bank every year for the first two years (based on a purchase price of R10-million) as well as capital growth - a growth which had averaged 12% over the last six years in Camps Bay.

“The owners get usage of the property from the date of transfer and after two years have the option of contracting out the management of their properties, retaining Lace to operate the apartment as a business, operating the business themselves, or simply maintaining the property as a holiday home or retirement residence. This is a hassle free investment for two years.”

But what does the future hold for property in South Africa? David added: “We’ve seen property prices jump by 50 to 60 percent, which I don't believe is healthy for any environment. But top blue chip property investments should stabilise to between 8 percent and 12 percent.”


http://www.fly-2let.co.uk/news525.html

You're wrong, a strong rand leads to low inflation and thus govt revenue increases dramatically because inflation is low and consumer spending is robust thus higher VAT receipts and higher paye as more ppl are employed. For proof look at the econony's performance after the rand recovered from it's 2001 crash.
And govt debts come down because a stronger currency reduces the real cost of foreign debt.



I really feel like Alice in Wonderland right about now...


You are either naïve about macroeconomics, blissfully unaware of the "currency wars" being waged globally currently, or know far more than reserve bank and government officials in dozens of countries globally (incl Japan, the US, and Brazil, to name just a few) that are taking active measures to deliberately devalue their currencies.

Media reports from just the last few days alone on this issue...

Brace Yourself: Currency War Is the Next Crisis: http://www.newsweek.com/2011/01/01/brace-yourself-currency-war-is-the-next-crisis.html

Brazil has sounded a new note of warning in the international "currency war" by pledging not to allow the United States to "melt the dollar": http://www.telegraph.co.uk/finance/currency/8241635/Brazil-pledges-to-stop-US-melting-the-dollar.html

Japan Is Becoming The First Major Casualty Of The Currency War: http://www.businessinsider.com/japan-casualty-currency-war-2011-1

I recommend you enlighten yourself on this issue before engaging on it...

thanks regel best forum rules.....

Immediate impact (UN security council seat) wrt to South Africa now part of BRICS - rock on.

Everything you have written above shows just how clueless you are bud. Food, taxi fare and electronics will be the last thing on their minds when they lose their job because the factory they are working in closes down and they now get no money!!

No bud, it's you who's clueless about economics. What you're propagating is called Voodoo-economics, a bunch of pseudo-intellectualism as far as I'm concerned.

Anyways I'd rather believe this expert not an armchair economist like you.

The fallacy of a weaker randADRIAN SAVILLE | JOHANNESBURG, SOUTH AFRICA - Sep 06 2010 13:52

A study by Adrian Saville using 30 years of data shows there is no meaningful relationship between a weaker rand and a rise in South African manufacturing production.

If people are anticipating that a revival of manufacturing will flow from a weaker rand, they are possibly pinning their hopes on defying history.

In fact, the closest relationship between movements in the rand and manufacturing growth that the study could identify was a roughly 10% explanatory power, which occurred when observing a lagged manufacturing response time of 12 months and a currency move over six months.

However, in sharp contrast to the textbook argument, the relationship is negative.

A closer and more powerful explanatory relationship was found between the South African manufacturing industry and G7 GDP, suggesting that the country's manufacturers simply participate in global economic growth.

If the rand was to be "managed weaker" it assumes that the South African Reserve Bank can control the level of the rand, which infers it can control volatility.

Based on the evidence of the research, the currency price volatility matters more than the level of the rand, so perhaps the point of departure is if the central bank could control a component, it should worry about volatility first.

However, the average daily turnover in the South African foreign-exchange market is $10-billion. This compares with the size of South Africa's forex reserves of just over $40-billion, equivalent to four days' turnover and clearly insufficient to manage the rand.

In addition, even if the rand could be managed, who would choose the "right level" for it; and what would happen when that "right level" is no longer right? The risk of a once-off intervention converting into regular price "fixing" becomes apparent.

Furthermore, reducing the price of South African exports and increasing the price of imports by weakening the rand might parade as competition, but it does not represent competitive edge or sustainable advantage. Competing on price is a race to the bottom.

It is arguably perverse that South Africa has forex controls designed to keep money in the country while, at the same time, a growing body is calling for the rand to be allowed to weaken, for example, by taxing inflows through a Tobin tax.

Dynamics have also not been considered. If a weak rand helps us compete then, all things being equal, demand for our exports will rise and imports will fall. This would translate into a greater demand for rand in global markets and a smaller demand for other currencies in South African markets, which should convert into rand appreciation.

Much of the global evidence shows us that successful export nations experience such currency appreciation.

For the country to embark on a rand-weakening exercise could prove more detrimental than beneficial: the success behind South African manufacturing and its global competitiveness lies elsewhere. With labour being the single most important manufacturing input, labour productivity cannot be overlooked as a source of improving competitiveness.

Critically, this view does not mean competing on the basis of lower wages, but rather competing through higher labour productivity, as well as higher productivity in production ingredients. By being part of a country in which these competitive strengths are developed, South African manufacturers will ensure that their success will flow from sustainable advantages over which they have influence and policy makers have control.

Furthermore, in such a setting, employment levels are likely to grow, not shrink, and wages will climb with gains in productivity. This contrasts sharply with a position of relying on the rand as a key competitive input, a factor over which manufacturers and policy makers have little control, and which leaves employment and wage levels at the mercy of "the rand".


•Adrian Saville is CIO of Cannon Asset Managers and he holds a Visiting Professorship in Economics and Finance at the Gordon Institute of Business Science. Visit Adrian's blog at www.adriansaville.com


Read more news, blogs, tips and Q&As in our Smart Money section. Post questions on the site for independent and researched information


Source: Mail & Guardian Online
Web Address: http://www.mg.co.za/article/2010-09-06-the-fallacy-of-a-weaker-rand

errr we are not a major manufacturing exporting country. we are a low cost per unit exporter due to low wage base, that means we export cheap stuff like coal and grapes.
yes we export some cars but we are not Germany using high wage staff to sell xray machines, cars and planes which means Germany has limited competition as its a export sector built up over generations.
Sa has shit laods of competition when exporting low production cost , low retail sell items such as appels. germany has limited competioton when selling trains.

See where this is going???

We are not and will never be a major munufacturing exporter as we are killed by low cost (see sa clothing industy almost non existance due to vietnam, china etc), lower cost and weaker currency base.

So you banging on about weak currency has no relevance to what I have been talking about. I export low cost agricultural items (grape and wine) so when currenty strong Im killed by Chile, Argentina etc who have intentioally weaken their currency in order to be competative.

I cant belive you are this naieve to belive that agriculture and mining (our 2 biggest employers) WONT be destroyed by a strong currency.

Next we all belive tourism is a great employer and next big SA export/Import. So will I go to SA from anywhere when the rand is strong (when I could go 100 countries with a cheaper cost per beer/ meal/souvinier)? think about that

There are obviously different points of view on this issue but like i mentioned before a loot of the other BRIC countries use exchange rate management.


Brazil has launched a fresh attempt to limit the appreciation of its currency, as fast-growing economies renew their efforts to restrict damaging inflows of “hot money”.

In a move to curb speculative trading, the central bank announced that domestic banks would have to hold higher reserve requirements against foreign exchange positions.

The decision follows Chile’s decision this week to intervene in currency markets to hold down the peso. Chile has traditionally taken a hands-off attitude to its floating exchange rate.

The Brazilian currency, which has gained about 13 per cent cent against the dollar since May, slid on the news. In New York, the real fell 0.8 per cent to R$1.6869 against the dollar.

Investors warned that actions by Brazil, which was the first country last year to warn of the dangers of a “currency war”, were likely to be followed by other emerging markets. While market participants say global measures to restrain foreign exchange appreciation have not yet been drastic, many countries have taken action to prevent their economies being destabilised by rapid inflows of capital chasing high returns.

Ousmène Mandeng, head of public sector investment advisory at Ashmore Investment, a specialist emerging market fund, said: “Brazil has been leading the charge and we are clearly going to see a lot more actions like this.”

The actions have reawakened interest in how to manage destabilising flows of speculative money, with the International Monetary Fund suggesting this week that the world needed rules to govern the imposition of capital controls.

But Mr Mandeng said that by using prudential banking regulation rather than direct controls on capital movements, Brazil reflected a trend of managing speculative flows in a measured way. “Countries are going to continue intervening, but in a more careful way than many at one point feared.”

Last year, many emerging market countries blamed the prospect of “quantitative easing” by the US Federal Reserve for pushing cheap money into financial markets and increasing upward pressure on emerging nations’ currencies.

But such pressure has persisted even after a return towards normality in US bond markets has reduced the imperative for looser monetary policy.

So far, emerging markets have been circumspect about criticising China for holding down the renminbi and thus threatening developing country manufacturers with loss of competitiveness if their currencies rise.

But Brazil this week said it would raise the issue at a meeting in China in April of the Bric nations, which include India and Russia

http://www.ft.com/cms/s/0/7becb4e4-19c6-11e0-b921-00144feab49a.html#axzz1AKghdKYj

Immediate impact (UN security council seat) wrt to South Africa now part of BRICS - rock on.

SA got elected to UNSC before BRIC invite, but clearly lots of wheeling and dealing was going on prior to the vote. SA had to be nominated by Africa, (not other BRIC countries), showing SA's influence on the rest of Africa. After all, we just finished a rather controversial stint on the UNSC just a couple of years ago. It's unusual to see an African country return so quickly, esp since there are over 50 other countries in Africa and a rotational system usually applies. Hope our voting record is better this time. Last time was an embarassment under Mbeki's regime. :ohno:

SA's stature grows on world stage
MANDY ROSSOUW: ANALYSIS
JOHANNESBURG, SOUTH AFRICA - Jan 07 2011 00:00

Like a small political party becoming the kingmaker in a hung municipality, South Africa has become a key geopolitical broker since the country's elevation to the United Nations Security Council and an invitation to join Brazil, Russia, India and China in the enlarged Brics.

President Jacob Zuma is emerging as something of an international statesman after shifting his focus in 2010 to world affairs. He spent a significant chunk of the year jetting around the world to woo presidents and power brokers.

Late last year South Africa received a formal invitation from China, which made good on its promise to include South Africa in the Bric formation, to attend the Bric summit hosted by Beijing in April this year.

This is the high point of a relationship that has become stronger and more intimate since Zuma took power. The Chinese like the fact that Zuma seems to speak for the people and not just for elites.

"He's of the working class, which makes him very popular with people on the ground. This is important to be a good leader," one Chinese government official said.

Serious about world affairs
The Chinese are also impressed by the vigour with which Zuma has tackled diplomatic issues since signalling that he is a head of state who is serious about world affairs. He visited all the Bric countries in a single year.

Stronger links meant that a number of ANC leaders were sent to China last year for mentorship in the Chinese system of governance.

The Chinese government sees South Africa as a gateway to Africa, especially African states where infrastructural development is needed.

In South Africa itself China plans several large-scale investments -- it recently arranged a R140-billion credit facility for the development of renewable energy. However, the Asian superpower's sights are set mainly on the rest of Africa, where bigger projects and contracts loom.

The rapprochement between South Africa and China also appears to be of growing interest to the developed world. French President Nicolas Sarkozy hastily tried to arrange a working visit to South Africa shortly before Christmas last year to get Zuma on his side. Sarkozy backed down only once Zuma promised to go to Paris on a state visit in March.

France, as the incoming president of the G20, wants South Africa to help to convince China to allow the sticky issue of climate change to be placed on the agenda of the G20.

Diplomats say China insists that climate change should be dealt with only by the United Nations, which created the United Nations Framework Convention on Climate Change. Its next meeting will be in Durban at the end of the year. France believes that consensus on climate change in the G20 will help to make the Durban summit a success.

Tit-for-tat business
But diplomacy is a tit-for-tat business. The Bric countries will dominate the Security Council this year -- Brazil, India and South Africa are serving as non-permanent members, while China and Russia have permanent seats -- and South Africa wants to kick-start the UN reform agenda.

In 2008 China said it would support the inclusion of more developing countries on the council. Liu Zhenmin, China's deputy permanent representative to the UN, said that these should particularly encompass African states. South Africa is the obvious choice and the expectation is that China will throw its weight behind South Africa's campaign for a permanent seat.

At a press briefing this week, Maite Nkoana-Mashabane, the international relations minister, made it clear that South Africa expected the current configuration on the council to give UN reform a significant boost. A confident Nkoana-Mashabane told reporters: "If we had our way it would have been done yesterday."

But European diplomats have warned that South Africa's weak stance on the crisis in Côte d'Ivoire -- South Africa refused to confirm the winner of the election, Alassane Ouattara, as the president of the country -- will complicate the push for reform, as will South Africa's refusal to push for further sanctions against Iran for stonewalling on its nuclear programme

http://www.mg.co.za/article/2011-01-07-sas-stature-grows-on-world-stage

And this is one of the reasons why SA's invite to BRIC was so strategic on the part of current BRIC members. We represent the de facto gateway to (and voice for) this market, especially as our SA multinationals have spread throughout Africa (MTN, Massmart, Shoprite, Standard Bank, Protea Hotel, to name just a few)...

-----------------

Investors wake up to Africa
LYNLEY DONNELLY - Jan 07 2011 13:42

Walmart's entry into Africa through the purchase of a majority stake in Massmart reflects a significant change in the attitude of global investors to the continent. African nations are being recognised as consumers -- modest consumers in the global context, but consumers nonetheless.

As World Cup and vuvuzela euphoria gripped the globe in mid-2010, investment bank Goldman Sachs released a report on the potential of the continent. It compared Africa's potential growth with those of the Bric nations -- Brazil, Russia, India and China -- and the Next 11 (N-11), the most populous emerging countries after the Brics.

While not outstripping the performance of the Bric countries individually, the top 11 countries in Africa -- both in population and GDP -- could together become larger than both Brazil and Russia by 2050, the report found.

They are the Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Morocco, Nigeria, South Africa, Sudan, Tanzania, Uganda and Zimbabwe.
It noted that the rise of the African middle classes had already caused a shift in patterns of spending on consumer goods.

Mobile phones, arguably an unlikely candidate for mass consumption in Africa, had grown astronomically, with the number of subscribers rising 20-fold between 2000 and 2008.

The rise of the African 11's middle classes was not to be sniffed at either. They could grow to 400-million by 2050, equalling that of China, according to Goldman Sachs.

And while growth of the middle classes in countries such as China and most of the N-11 is set to slow, Africa's middle classes were likely to continue swelling until 2050, according to the report.

The growing potency
In research released at about the same time, global management consultancy McKinsey also highlighted the growing potency of the African middle strata.

"In 2000, roughly 59-million households on the continent had $5 000 or more in income [annually], above which they start spending half of it on non-food items. By 2014, the number of such households could reach 106- million," the report said.

It pointed out that Africa already had more middle-class households than India, and that they were likely to spark cycles of increased domestic growth.

McKinsey also noted the effect of growing urbanisation. In many countries, as workers moved from agricultural to city jobs, this was increasing their productivity and prompting infrastructure development to cater for millions of new urban arrivals.

The report said that by 2030 Africa's top 18 cities would have a combined spending power of $1,3-trillion -- a startling figure considering that a few decades ago only 28% of the continent's entire population lived in cities.

What Africa has to offer
Traditional investors are interested in the primary resources that Africa offers, but less traditional investors are also showing increasing interest.
There is a growing movement of investment to do more than merely earn profit, which benefits developing countries, including many in Africa. The new focus includes "impact investments".

According to Margot Brandenburg, an associate director at the Rockefeller Foundation, this implied investing with the purpose of generating social or environmental good in addition to profit.

"Impact investing is born of the same idea to incorporate social and environmental considerations into investment decisions, but focuses on investment into businesses and funds that intentionally or proactively create social or environmental benefits," said Brandenburg in a report.

Those participating in the trend included private foundations, large-scale financial institutions, private wealth managers, commercial banks and companies, she said.

The Global Impact Investment Network (GINN) was set up in late 2009 to disseminate best practices, support research and develop infrastructure tools -- such as common performance reporting standards that would enhance the effectiveness of impact investments and attract new participants, according to Brandenburg.

Africa is already the recipient of successful impact investments. One cited by Brandenburg is Bridge International Academies, which operates a franchise-like network of ultra low- cost, for-profit private schools, delivering high-quality education. The network has been very successful in Kenya.

Investments
With a $1,8-million investment from the Omidyar Network, a philanthropic investment firm established by eBay founder Pierre Omidyar, the organisation will be expanded to 1 800 schools in sub-Saharan Africa by 2015.

Another is the Alliance for a Green Revolution in Africa (Agra) and the International Fund for Agricultural Development, which each provided $2,5-million in loan guarantees to leverage $50-million from Equity Bank. The money was then used to support investments in smallholder agriculture.

According to Brandenburg, by May last year the programme had lent more than 679-million Kenyan shillings ($9,8 million) to about 20 400 beneficiaries, including more than 19 000 small farmers.

South Africa's Standard Bank has put $100-million into the project, making it one of the few South-South impact investments. Brandenburg said that the concept of impact investments had gained ground despite the recession. "Surprisingly, the economic downturn in traditional investing markets has not discouraged interest in impact investing," she said.

"After the markets crashed in 2008, investors around the globe re-evaluated their investment activities and profit expectations, and many looked to investment models that provided value beyond financial returns."

She said that impact-focused organisations such as foundations were looking at reduced endowments and grant-making budgets. "In order to do more good with less money, many of these foundations began to explore impact investments that preserve capital while complementing grantmaking."

Brandenburg said that the risk profile of impact investments was similar to those of other venture capital or high-yield debt investments. But they could carry higher "reputational risks, since they finance businesses whose clients are the global poor".

http://www.mg.co.za/article/2011-01-07-investors-wake-up-to-africa

Well argued and articulate work...

------------------------

Creating more walls than Brics
JOHANNESBURG, SOUTH AFRICA
Jan 07 2011 15:42

South Africa has finally edged closer to becoming a member of the "elite" grouping of the Bric nations (Brazil, Russia, India and China), following the recent expression of support by China and Russia for Pretoria's bid. It is expected that South Africa will be accepted formally as a new Bric member at these emerging powers' next summit in April.

The Bric states wield significant diplomatic and economic clout and have become crucial powerbrokers in the evolving, albeit volatile, multi-polar world order.

They are the four biggest economies in the developing world and Goldman Sachs has predicted that, thanks to their rapid growth rates, the combined economies of the Brics could overtake those of the current wealthiest countries in the next four decades. They account for 40% of the world's total foreign exchange reserves. They represent more than 40% of the world's population and more than a quarter of the world's land area.

Unlike most Western countries, the Brics (with the exception of Russia) weathered the global economic recession relatively well. This was partly as a result of their pursuit of unorthodox economic policies, which have eschewed the neoliberal nostrums embodied in the now discredited so-called Washington Consensus. The Brics, notably China, have played a pivotal role in cushioning global growth during the recession and have actively championed the reform of the international financial system within the G20.

It is not surprising, therefore, that South Africa finds close association with the Brics alluring. Yet amid South Africa's apparent diplomatic triumph a number of questions remain unanswered about the purpose and benefit of positioning the country within the Bric grouping. It is not clear what South Africa's motivation for joining the group is and what it seeks to gain from its membership. It is not evident what South Africa's strategy to the Brics is and how this fits into the country's wider global strategy.

This is all the more important given that Brics are not a formal political club or economic bloc, with clearly defined and coherent objectives and programmes. It is a construct of Jim O'Neill, a former chief economist at Goldman Sachs, that is based on certain assumptions and projections, which may or may not materialise. In any case, the notion of Bric as an analytical category is problematic and has outlived its usefulness. How, for example, does one justify the inclusion of the failing Russian state in the group and the exclusion of Turkey, a resurgent geopolitical powerhouse and a fast-growing economy -- the sixth largest in Europe?

Ibsa and Brics
How cohesive the Brics will be is another matter of concern, not least because its agenda runs the risk of being burdened by contentious issues, such as competition between China and India, China's historical alliance with Pakistan, Beijing's campaign against India's (and Japan's) bid for United Nation Security Council permanent membership and unresolved border disputes between Beijing and Delhi. Moreover, it bears stating that while India, Brazil and South Africa rank among the world's leading democracies, Russia and China are not known for their democratic practices.

What South African policymakers need to explain is how our country's imminent membership of the Brics will affect its role in the Ibsa (India, Brazil and South Africa) Dialogue Forum, which was set up in 2003 in terms of the Brasilia Declaration. The declaration set out a broad agenda for cooperation among the three countries, which included an ambition to alter the balance of power between rich and poor countries by democratising global decision-making bodies, such as the UN, and international financial institutions, such as the World Bank and the International Monetary Fund, developing alternatives to the current model of globalisation and giving shape to the ideal of promoting the economic and social interests of the South.

Does South Africa's elevation to Bric membership imply that this transformative policy agenda will now be promoted within the confines of the Brics and does it signal the beginning of the end of the Ibsa forum?

Given the extensive financial and human resources required to drive and maintain effective club diplomacy, our policymakers will have to accept that the Brics and Ibsa are essentially competing entities and that it will not be possible in the long run for South Africa to sustain both of them.

Membership of the Brics has been touted by some government officials and business commentators as providing a big opportunity for South Africa to leverage trade and investment relations with these countries. This is not a convincing argument. South Africa does not need to become a Bric member to maximise economic cooperation with these countries; it can do so at a bilateral level.

Since 1994 South Africa has developed strong bilateral economic relations with all the Brics and has signed strategic partnership frameworks with some of them. China, the bedrock of the group and the only credible contender for global superpower status, has become South Africa's single biggest trade partner.

But this steady economic progress has masked inescapable facts: despite the vast commercial opportunities the Brics offer, access to its markets has been constrained by a range of tariff barriers as well as complex and restrictive domestic regulations.

Brics relations
As World Bank studies have shown, it is far easier to do business in South Africa than it is in the Brics. Compounding these market access challenges has been the reality that the Brics are our competitors in sectors such as steel, clothing and textiles and the automotive industry. Also, despite sanguine public pronouncements, South Africa has yet to upgrade its limited trade pact with Brazil to a comprehensive agreement and its negotiations on a preferential trading arrangement with India has been proceeding at an excruciatingly slow pace.

As such, the Brics are barren ground for yielding significant trade and investment opportunities. Against this backdrop, it is not clear how Brics membership will make up for the failure to extract meaningful economic benefits at the bilateral level.

Cultivating strong relations with the Brics is not only important, it is also in South Africa's interest. The global financial crisis has underscored the importance of diversifying South Africa's export markets away from Europe -- which currently absorbs 40% of our exports -- and of exploring new markets, particularly those in the fast-growing developing economies. The Brics should be an integral part of this diversification strategy, but strengthening links with them should not be the country's all-consuming foreign economic policy goal. South Africa's evolving South-South strategy should include Africa, the Middle East and other Asian and Latin American countries.

South Africa's engagement with the Brics must be guided not by ideological whims, but by a strategic paradigm that is grounded in our country's domestic needs and fundamental interests.
South Africa has in the past earned international recognition on the basis of its own intellectual and normative weight. It has always championed multilateralism, offered innovative ideas on vital global governance issues and demonstrated leadership in conflict resolution, peace-building and post-conflict reconstruction in several parts of Africa. Moreover, the country has over the years developed a fluent narrative of global development, especially on the imperative of bridging the North-South chasm. What happened to all that conceptual clarity, diplomatic finesse and self-assurance?

The carefully cultivated image of South Africa as an assertive regional power sits uneasily with that of a country begging for acceptance into the Brics' informal deliberations. The spectre of South Africa rejoicing at being invited to join an amorphous entity such as the Brics is plainly degrading and it is an affront to our national pride. South Africa needs to ponder its foreign policy identity and strategic posture in a changing and complex global environment.

Dr Mills Soko is an associate professor at the University of Cape Town's Graduate School of Business.

Dr Mzukisi Qobo is head: emerging powers and global challenges at the South African Institute of International Affairs

http://www.mg.co.za/article/2011-01-07-creating-more-walls-than-brics

No bud, it's you who's clueless about economics. What you're propagating is called Voodoo-economics, a bunch of pseudo-intellectualism as far as I'm concerned.

Anyways I'd rather believe this expert not an armchair economist like you.

Believe what you will, you seemingly speak from a purely academic/no real world perspective point of view - actually on most matters you discuss here you do that. The uneducated masses will never benefit from a very strong rand as they do not have any skills to operate in a strong rand reality. Yes some businesses will thrive, but the vast majority of our people will suffer greatly

This is further good news for the economy...


In an effort to increase its trading exposure to the minerals-rich African markets, India’s biggest trading house, MMTC, will open offices in Johannesburg.

In the past, the State-owned trader mainly worked through indirect partnerships to gain access to Africa’s commodities, recording only around $2-million of direct trading with African countries last year.

Speaking at a media breakfast in Johannesburg, MMTC MD Hardip Mann said that opening the South African offices would provide the company with a base to significantly increase its exposure to the markets. “We want to cut out the middleman, thereby saving costs and upping profitability for both countries.

“In fact, I will admit that we are late. We should have opened offices in South Africa five years ago already.”

Indian High Commissioner to South Africa Virendra Gupta believed that the new office would further stimulate bilateral trade between India and South Africa. The two countries have set a $10-billion trade target during President Jacob Zuma’s visit to India, which they hoped to reach within the next year.

MMTC is India’s largest exporter of minerals, the single largest importer and supplier of gold in the country, the leading exporter and importer of agrocommodities and a major player in coal and hydrocarbons.

Mann said that while the trading house would be looking at a whole spectrum of commodities to trade, it was particularly interested in coal and gold.

India is battling with an everincreasing demand for power, and may face a coal shortfall of 189-million tons a year by 2015, which would lead to a twofold increase in imports.

Traditionally, the country had been leaning on Indonesia for coal, but Mann pointed out that increasing demand for coal from other countries, such as China, was putting huge pressure on the island country.

“That means our next destination will be countries such as South Africa, that has the right quality coal to blend with our coal.”

Chairperson Ved Prakash said that MMTC would be looking to take its coal business a step further than just trading.

“We are interested in forming partnerships and joint ventures on certain projects and investing in certain coal mines.”

Mann also said that India had an insatiable appetite for gold.

Last year, the country imported about 700 t of gold. Of this, MMTC was responsible for trading 186 t of gold, or about 25%.

“We are already in talks with the South African companies such as Rand Refinery, AngloGold Ashanti and Gold Fields to establish partnerships, that would cut out the banks and focus on direct imports.”

Other commodities that sparked MMTC’s interest include diamonds, non-ferrous metals, agro products and fertilisers.

Gupta emphasised that MMTC and other Indian companies fully supported South Africa’s drive to increase the beneficiation of commodities in the country, as stated in Economic Development Minister Ebrahim Patel’s New Growth Path, and that they would take advantage of such possibilities.

An interesting story in today's Business Day

SA’s real growth 7th fastest to 2050

But survey shows it is likely to fall out of the top 20 economies by 2050, as Nigeria and Vietnam move up the rankings.
LINDA ENSOR
Published: 2011/01/10 06:33:22 AM


The South African economy is expected to be ranked seventh globally in terms of its real average annual growth rate between 2009 and 2050, growing faster than Brazil and Russia in dollar terms.



However, it is likely to fall out of the top 20 economies by 2050, as Nigeria and Vietnam move up the rankings, according to a study by global business services company PricewaterhouseCoopers released on Friday.



The report, The World in 2050, concluded that the financial crisis of 2008 had accelerated the shift in global economic power to emerging economies, with China likely to overtake the US as the biggest economy by 2050.



The study projected SA’s real economic growth rate to average 5% annually between 2009 and 2050, its population to rise by an annual average of 0,3%, its gross domestic product (GDP) per capita by an average 3,6% a year and for it to experience an average annual growth rate of 1,1% due to changes in exchange rates.



The estimates were made in dollar terms — taking into account the effect of real exchange rate changes relative to the dollar — and in terms of domestic currency and purchasing power parity.



SA’s projected growth rate compared with Vietnam’s 8,8%, India’s 8,1% , Nigeria’s 7,9% , China’s 5,9% , Indonesia’s 5,8% , Turkey’s 5,1% , Brazil’s 4,4% , Russia’s 4% , Australia’s 2,4% , and less than 3% for the Group of Seven.



The E-7 emerging economies (China, India, Brazil, Russia, Mexico, Indonesia and Turkey) are likely to overtake the G-7 (the US, Japan, Germany, UK, France, Italy and Canada) before 2020 if GDP is measured using purchasing power parity , which corrects for price levels tend ing to be lower in emerging economies.



The shift in the global economic order would be slower but just as inexorable if GDP were measured on market exchange rates. The E-7 economies were projected to overtake the G-7 in 2032 and China to overtake the US in the same year, although on a purchasing power parity basis this would probably occur in 2018.



By 2050 the E-7 economies would be about 64% larger than the current G-7 when measured in dollar terms at market exchange rates — now they represent about 36% of the G-7 — or about twice as large in purchasing power parity terms (currently 72% on this basis). China, despite its projected market growth slowdown, was expected to be 35% larger than the US by 2050 at market exchange rates, or 57% larger in purchasing power parity terms.



"The key drivers of the E-7’s growth are China and India, although the former’s growth will slow down progressively due to its significantly lower labour force growth arising from its one-child policy. India’s growth will remain fairly strong even in the last decade of our projections."





Summing up the shifts in global economic power, the report said "this changing world order poses both challenges and opportunities for businesses in the current advanced economies".



"On the one hand, competition from emerging market multinationals will increase steadily over time and the latter will move up the value chain in manufacturing and some services (including financial services, given the weakness of the western banking system after the crisis).



"At the same time, rapid growth in consumer markets in the major emerging economies associated with a fast-growing middle class will provide great new opportunities for western companies that can establish themselves in these markets.



"These will be highly competitive, so this is not an easy option — it requires long-term investment — but without it western companies will increasingly be playing in the slow lane of history

SA’s diplomatic profile

Monday, 10 January 2011 15:06

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bricchinainvestmentmartyn davies

It can be a memorable year ahead

South Africa starts off 2011 with a considerably enhanced international diplomatic profile and it could become a memorable year on this front which will cement its position as the leading power on the African continent. There is also the promise of concluding it on a high as host of a major international conference at the end of the year.


On January 1 South Africa assumed its seat for a two year-erm as a non-permanent member for the United Nations Security Council, following its election to this body by 182 member states of the General Assembly on October 12, 2010. It is the country’s second stint at the Security Council, Following its first term in 2007 and 2008.

International Relations and Co-operation Minister Maite Nkoana-Mashabane said in a statement “It is a significant honour for South Africa to serve on the Security Council for a second term.”

She added that the country was committed to contributing to the work of the council in maintaining international peace and security, especially in Africa, and through this the betterment of the conditions and lives of all.

It is going to be a busy year for the country at the UN and that will topped off at the end of the year when the 17th Conference of the Parties (COP 17) on climate change will be hosted in Durban. After the huge disappointment of COP 15 in 2009 at Copenhagen and 2010’s non-event with COP 16 in Cancun, Mexico, the Durban meeting might be the last chance for the international community to get global cooperation on climate change back on track.

In the long term, however, the most significant recent development with the most potential for positive spin-offs was the invitation to South Africa to join the BRIC (Brazil, Russia, India and China) group of major emerging economies.

Some, and especially South African observers and commentators, have tended to downplay the importance and significance of this development as more about politics than economics and as really only reflecting expectations it will be the gateway for investment in the fast-growing Africancontinent.

“It's not a natural fit," said Razia Khan, Africa head of research at Standard Chartered. South Africa's economy is less than a quarter of the size of Russia's, which is the smallest in the original grouping. While it may be the largest in Africa, it is only a little bigger than China's sixth-richest province.

The markets, however, seemed to have judged the development somewhat more positively and Reuters reported that South Africa's rand has strengthened since it was invited to join BRIC, partly in expectation of an inflow of funds from realigning BRIC portfolios.

Marvin Zonis, professor emeritus at the University of Chicago Booth School of Business, said the impact from capital inflows will be limited, and long-term gains will come from how well South Africa can use its BRIC status to make itself more attractive for investment.

South Africa's biggest backer for BRIC has been its largest trade partner, China, which not only provided an invitation for Pretoria to join but also asked President Jacob Zuma to attend a summit of BRIC leaders it will host. "This is something that China sees in its own interest with its aim of understanding the future of Africa and becoming an ever bigger presence there," Zonis told Reuters.

"It is really smart on the part of China to do this and it is also really good for South Africa. It legitimises South Africa as a future global power and as an investable country," he said.

China emerged as Africa's largest trading partner in 2009, outpacing the European Union and the United States, China's People's Daily said.

BRIC has been seen as moving economic activity away from the established powers in Europe and North America and erecting a wall that limits their global power.

With sub-Saharan Africa's total economy growing from $322 billion in 2000 to $931 billion in 2008, according to the International Monetary Fund, it seemed that an African state would eventually join the group.

Martyn Davies, CEO of Frontier Advisory and a specialist on African-Chinese economic ties said "this will help South Africa project itself as a first tier emerging market rather than its current second tier status."

obviously the IMC are not as educated as our 25 year old Dr Prof journalist.
Council lauds SA's Bric invite
24 minutes ago

Cape Town - SA's invitation to join the Bric group of countries (Brazil, Russia, India, China) is an affirmation of its role in the world economy and will boost trade and investment, the International Marketing Council (IMC) said on Monday.

"It can expect to boost investment and trade opportunities for the country, as it has done for the other four states comprising the informal grouping," the council said.

According to the International Monetary Fund, the Brics will account for 61% of global growth in three years.

The council said the fact that South Africa had the opportunity to be affiliated to the group recognised SA as a developing economy of significance and that it was the gateway to Africa.

"A new world order is unfolding where economic clout and thus political power is shifting from West to East, with the Bric countries as the visible face of this movement," the council said.

The invitation to join Bric, combined with its renewed membership of the United Nations Security Council, would enhance South Africa's influence.

"Huge new opportunities will open up for South Africa on the investment and trade front. Private companies may also find market access into the Bric countries easier, and partnerships with companies from this grouping might evolve," it said.

South Africa must use the opportunity to increase its competitive edge, it added.

"South Africa will play in a different league and as such, will have to improve its delivery and performance," said Miller Matola, the IMC's chief executive.

"To draw South Africa into this powerful club underlines the country's growing international role and its future significance for those who want to make use of the expanding African opportunities.

"It is, in fact, an association that does not only benefit the group, but the emerging world as a whole and Africa, in particular."

Entry into BRIC will propel SA to new heights
Monday, 10 January 2011


A new horizon for South Africa: SA is expected to formally accept the invitation to join the BRIC alliance at the next BRIC summit in April 2011. South Africa's invitation by BRIC (Brazil, Russian Federation, India, China) to join the bloc as a full member will propel the country to new heights, say experts. It is expected that South Africa will be accepted formally as a new BRIC member at these emerging powers' next summit in April 2011.



"It can expect to boost investment and trade opportunities for the country, as it has done for the other four states comprising the informal grouping," says International Marketing Council of South Africa's CEO, Miller Matola.



SA, which got an invitation to join the powerful bloc of emerging economies, had a combined GDP of R18 trillion late in December.



BRIC will account for 61 percent of global growth in three years time, according to the International Monetary Fund.



"The fact that South Africa has the opportunity to be affiliated to this group of powerful emerging economies underlines two main points. The country is recognised as a developing economy of significance in its own right, but also that it is the gateway to the continent of Africa - the next growth superstar," expressed Matola.



Matola believes that this is a good step for South Africa, not only economically but also politically. He said a new world order is unfolding where economic clout and therefore political power is shifting from West to East, with the BRIC countries as the visible face of this movement.



South Africa, along with other emerging economies, has long been punting for a greater role in international organisations like the IMF and the World Bank.



The invitation to join BRIC, combined with its renewed membership of the Security Council, will enhance its influence in this regard too, added Matola.



"Huge new opportunities will open up for South Africa on the investment and trade front. Private companies may also find market access into the BRIC countries easier and partnerships with companies from this grouping might evolve.



"This might become particularly important as South Africa is already the biggest emerging economy investor in the continent and its companies are active in at least half of all African countries," Matola stressed.



Joining BRICS will also mean that South Africa must use these new opportunities to increase its competitive edge.



Last year, the country's ranking in the Global Competitiveness Index (GCI) of the World Economic Forum (WEF) dropped, but its performance has in fact remained stable. South Africa's slight decline reflected improvements from other countries and their ability to spur growth.



"South Africa will play in a different league and as such, will have to improve its delivery and performance," says Matola. "To draw South Africa into this powerful club underlines the country's growing international role and its future significance for those who want to make use of the expanding African opportunities.



"It is, in fact, an association that does not only benefit the group, but the emerging world as a whole and Africa, in particular," said Matola.

SA to use Bric to punt green aims, fair trade

Trade and Industry Minister Rob Davies says South Africa will use its Bric invitation to promote global climate change.
LOYISO LANGENI
Published: 2011/01/13 07:01:24 AM


SA PLANS to use its invitation to join the Bric group of emerging economies to intensify the global campaign on climate change and drive demand for a fair agricultural trading system, Trade and Industry Minister Rob Davies said yesterday.



SA will attend its first meeting of the Bric bloc — made up of Brazil, Russia, India and China — in April . SA is hoping to use its membership to play a role in restructuring the world’s political, economic and financial architecture.





"We will use this membership to harmonise our relationship with these nations and push for a common position on multilateral forums including on contentious issues such as climate change and agricultural trade," Mr Davies said.



SA was planning to use its Bric membership to enhance its reputation as one of the leading campaigners for the reform of multilateral institutions including the World Trade Organisation, World Bank, International Monetary Fund and the United Nations Security Council, Mr Davies said.



Last month, 193 countries failed to agree on a position to reduce gas emissions during a United Nations Framework Convention on Climate Change conference in Cancun, Mexico. The next conference will be held in Durban in November.



The Bric members have all signed the Kyoto Protocol, a blueprint to reduce carbon emissions . Brazil, China, India and SA played a leading role in drafting the Copenhagen Accord at the UN Framework Convention on Climate Change meeting in the city in 2009.



The accord, which is not binding , sets out targets to reduce emissions by 2020. SA has pledged to cut emissions by 34%, Brazil by 38,9%, Russia and India by 25% and China by 45%. The Copenhagen Accord also aims to mobilise funds for developing countries to use in projects to fight climate change, reaching $100bn a year by 2020.



Finance Minister Pravin Gordhan last year introduced an emissions tax of 0,6% -4,1% on all new vehicle sales as the first step towards achieving SA’s targets.



Martyn Davies, CE of emerging market group Frontier Advisory, yesterday said the invitation to join Bric would raise renewed interest in SA’s economy. The government "is seeking to elevate our economy to a first-tier emerging market economy by accepting this invitation".



SA should also use the opportunity to market other countries in the southern African region as potential investment destinations, Mr Davies said.



langenil@bdfm.co.za



http://www.businessday.co.za/articles/Content.aspx?id=131326

JSE near record as foreign investors pile into SA equities
But rapid rebound worries locals, with experts noting a move to other asset classes
TIM COHEN
Published: 2011/01/13 06:31:31 AM

THE JSE all share index is set to top its previous record high in the near future, but most market analysts are curiously nonplussed about the possibility of the magic 33233 closing level being breached — partly because even pessimists do not think this constitutes a clear sell signal.

The all share has been about 1% off its record-high level for the past week, and it appears ready to take on the record levels reached at the height of the international boom in late 2007 and 2008.

Yesterday, the all share climbed to its highest level since May 2008, jumping 321,79, or 1%, to close at 32483,94.

Among the movers were Anglo American, rising 2,9% to its highest level since September 2008; BHP Billiton , up 2,3% to its highest since July 2008; and Angloplat , which rose 2,3%.

Many market commentators regard the level as something of an arbitrary number that means little. But despite their shrugs, achieving a new high would be surprising considering the enormous difference between the uncertain state of the global economy now and the seemingly unmitigated boom times a few years ago when the previous record was achieved.

Achieving this level would also underline the speed and extent of the stock market’s rebound since the start of the recession, forming precisely the "V" shape that most market commentators predicted was the most unlikely outcome of the recession.

The very speed of the rebound has caused some trepidation locally, with market experts estimating that domestic investors have been moving into other asset classes for the past six months and are only lightly invested in the equity market at the moment.

"There is lots of local money on the sidelines," one market commentator said.

However, this caution has been easily counterbalanced over the past year by international investors for whom emerging markets have been a haven of growth during a difficult period in their own markets.

Despite their now famous acronym, the emerging-market countries that lagged behind last year were the "Bric" countries — Brazil, Russia, India and China.

Equity markets in these countries are still way off the quasi-bubble levels that they reached in 2007. In their place, a host of mid- level emerging and developing market equity indices have hit peaks in the recent past — notably the South Korean and the Malaysian stock market indices.

Hence, should SA join Bric, as it has been invited to do, it would underline the catch-up process that has been under way within medium-sized economies over the past year and which has come about not as a result of global economic growth, but despite it.

Theuns de Wet, head of commodities, fixed income and currency research at Rand Merchant Bank , said the local equity markets benefited last year from the dual trends of a strong rebound in commodity prices and the overall attraction of emerging markets to developed-market investors.

Emerging markets had been attractive for some time, but the financial crisis "just hammered the point home", and it was this global shift that had been largely responsible for driving stock markets forward.

The contribution to global economic growth by emerging-market countries was more than 50% of the total for the first time last year, he said.

From a domestic perspective, growth has recovered too, and the bond markets had a tremendous run locally last year.

This may well become more significant this year, since asset switching out of bonds into equities could well be a driver of the equity market. A key variable has been the rand exchange rate, and its extended buoyancy was a determining factor last year.

Vestact analyst Sasha Naryshkine pointed out that although the equity market as a whole was close to record levels, many of the largest companies on the JSE were still far from their record highs. The market was being dragged upwards largely by retailers and supported by the traditional big-ticket players that previously did the heavy lifting, such as Anglo American , Mr Naryshkine said.

Mr de Wet said: "It’s the emerging-market consumer that will drive growth, so it’s not surprising that the consumer sector has done well." How long that continues


http://www.businessday.co.za/articles/Content.aspx?id=131316

BRIC becoming BRICS is a development of geopolitical significance
Tuesday, 18 Jan 2011

The world's four main emerging economic powers, known by the acronym BRIC, standing for Brazil, Russia, India and China, now refer to themselves as BRICS.

The capital S in BRICS stands for South Africa, which formally joined the four on December 24th 2010, bringing Africa into this important organization of rising global powers from Asia, Latin America and Europe.

Mr Jacob Zuma President of South Africa is expected to attend the BRICS April meeting in Beijing as a full member. This is a development of geopolitical significance, and it has doubtless intensified frustrations in Washington. The US has been concerned about the growing economic and political strength of the BRIC countries for several years. In 2008, for instance, the National Intelligence Council produced a document titled Global Trends 2025 that predicted:

The whole international system, as constructed following WW II, will be revolutionized. Not only will new players, Brazil, Russia, India and China, have a seat at the international high table, they will bring new stakes and rules of the game.

More recently, the US edition of the conservative British weekly The Economist noted in its January 1st 2011 issue that America's influence has dwindled everywhere with the financial crisis and the rise of emerging powers.

The US is still the dominating global hegemon, but a swiftly changing world situation is taking place as Washington’s economic and political influence is declining, even as it remains the unmatched military superpower.

America suffers from low growth, extreme indebtedness, imperial overreach, and virtual political paralysis at home while spending a trillion dollars a year on wars of choice, maintaining the Pentagon military machine, and on various other national security projects.

The BRICS countries, by their very existence, their rapid economic growth and degree of independence from Washington, are contributing to the transformation of today's unipolar world order, still led exclusively by the United States, into a multipolar system where several countries and blocs will share global leadership. This is a major aim of BRICS, which recognizes it's a rocky, long road ahead because those who cling to empire are very difficult to dislodge before they swiftly disintegrate.

Looking down that road the next few decades, it is imperative to contemplate two potentially game changing events that will heavily impact global politics, and the future of world leadership.

1. The rate of petroleum extraction will soon reach the beginning of terminal decline, known as peak oil. This means more than half the world's petroleum reserves will have been depleted, leading inevitably to much higher oil prices and severe shortages. Under prevailing global conditions, this will greatly exacerbate tensions between major oil consuming countries leading to wars for energy resources

One resource war already has taken place, the Bush Administration’s bungled invasion of Iraq, which possesses the world's fourth largest reserves of petroleum and tenth largest of natural gas. Since the US with less than 5% of world population absorbs nearly 30% of the planet’s crude oil, who's Washington's next target Iran? Behind the U.S.-Israeli smokescreen of alleged Iranian aggression and supposed nefarious nuclear ambitions, repose the world's third largest proven oil reserves and second largest natural gas reserves.

In 2009, the US, with a population of 300 million, consumed 18.7 million barrels of oil a day, the world’s highest percentage. The second highest, the European Union with a population of 500 million, consumed 13.7 barrels a day. China with a population of 1.4 billion people was third, consuming 8.2 million barrels. BRICS, incidentally, includes the country with the world's first largest natural gas reserves, Russia.

2. Equally dangerous, and perhaps much more so, is the probability of disastrous climate change in the next few decades, the initial effects of which have already arrived and are causing havoc with weather patterns. This situation will get much worse since the industrialized world, following slothful US leadership, has done hardly anything to reduce its use of coal, oil and natural gas fossil fuels that are mainly responsible for climate change.

Another climate question is whether the capitalist system itself is capable of taking the steps necessary to dramatically reduce dependence on greenhouse gas emissions as the socialists maintain. Eventually, under far better global leadership, some serious action must be taken, but the damage done until that point may not be rectified for centuries, if not longer. The question of better global leadership depends to a large degree on the outcome of the uni polar multi polar debate.

Returning to the immediate problem, Washington not only opposes BRICS' preference for multipolarity, but is disgruntled by some of its political views. For instance, the group does not share America's antagonism toward Iran, President Mr Barack Obama's whipping boy of the moment. BRICS also lacks enthusiasm for America's wars in Central Asia and the Middle East and maintains friendly relations with the oppressed Palestinians. The five nation emerging group further leans toward replacing the US dollar as the world's reserve currency with a basket of currencies not preferential to any one country, as is the present system toward the US, or perhaps even a non national global reserve legal tender.

BRICS, as an organization, had a most unusual birthing. The group was brought into the world, so to speak, without the knowledge of its members. The event took place in 2001 when an economist with the investment powerhouse Goldman Sachs created the BRIC acronym and identified the four countries together as a lucrative investment opportunity for the company’s clients based on the enormity of their combined Gross Domestic Products and the probability of increasing growth.

Neither Brazil, Russia, India nor China played a role in this process, but they took note of their enhanced status as the BRICs and recognized that they shared many similarities in outlook as well as significant differences in their types of government and economic specialties.

The main similarity was that they were emerging societies with growing economies and influence, and they viewed Washington’s unilateral world leadership as a temporary condition brought about by accident two decades earlier due to the implosion of the Soviet Union and most of the socialist world. They all seek a broader, more equitable world leadership arrangement within which they and others will play a role.

All five BRICS states, three of whom possess nuclear arsenals, maintain essentially cordial relations with the U.S. and try to avoid antagonizing the world superpower.

Despite productive working relations between the US and Russia, Moscow justly perceives Washington to be an implicit threat that seeks to neutralize, if it cannot dominate, it is now reviving former Cold War opponent. The Russian leadership seems to view the US as a strategically declining imperialist power, perhaps all the more dangerous for its predicament.

(Sourced from www.dissidentvoice.org)

http://www.steelguru.com/international_news/BRIC_becoming_BRICS_is_a_development_of_geopolitical_significance/186770.html

S. Africa's entry into BRIC enhances African voice in world
English.news.cn
2011-01-09 23:17:50

JOHANNESBURG, Jan. 9 (Xinhua) -- South Africa's recent admission to BRIC, which grouped Brazil, Russia, India and China, would not only benefit both sides, but boost the African continent's voice across the world, analysts say.

Chinese President Hu Jintao has issued an invitation to his South African counterpart Jacob Zuma, inviting him to attend the third BRIC leaders' meeting to be held in Beijing in 2011, Chinese Foreign Ministry spokesperson Jiang Yu told a news briefing on Dec. 28.

After South Africa's joining, BRIC has been renamed as BRICS.

BRIC's acceptance of South Africa as a full member was a mutually beneficial and strategic choice, and would make the organization's mechanism better representative of emerging economies, analysts and officials said.

Due to the global financial crisis, South Africa's economic growth has slowed down over the past two years.

The country's financial minister Pravin Gordhan recently said South Africa's entry into BRIC would bring the country a better environment to boost economy, experience in realizing rapid economic increase, more advanced knowledge and technology, and trade volume expansion.

Meantime, Martin Davis, a well-known South African expert on China-Africa ties, told Xinhua that the entry would promote BRICS' international prominence and its voice in international affairs.

South Africa's Business Day newspaper also said the participation would be conducive to the rise of South Africa, a country with a population of 49 million, in the international arena, and help boost the political and economic ties between South Africa and the other four BRICS countries.

Analysts said the entry of South Africa, Africa's biggest economy, would also lift up Africa's voice in the world community.

Sonny Maghess Vandru, a researcher with the China research center of South Africa's Stellenbosch University, told Xinhua that BRICS plays a very important role in the current changeable world, and South Africa, through the BRICS platform, would speak with a louder voice of the African continent with a population of over 1 billion.

Yang Lihua, director of the South Africa research center under the Chinese Academy of Social Sciences, said BRICS, after accepting South Africa, would help Africa turn into reality its development potentiality and promote Africa's influence in world political and economic affairs.

Although South Africa's latest participation brought an encouraging picture for the country, BRICS and Africa at large, challenges still lie ahead of South Africa if it wants to better play as a BRICS member, observers said.

South Africa needs to close the GDP gap between it and the other four BRICS members. Currently, the country's annual GDP is some 350 billion U.S. dollars, which is much less than that of the other four members.

South Africa also should improve its infrastructure, including roads, ports, power grids and so on, raise its scientific and technological levels, and boost its trade competitiveness.

Despite the challenges, the enlargement of BRICS, without doubt, has provided a good opportunity for South Africa and the bloc itself to achieve development.

BRICS would have a brighter future with the concerted efforts of the five members and the backup of all emerging economies.

http://news.xinhuanet.com/english2010/world/2011-01/09/c_13683055.htm

On South Africa Becoming a Bric - Don't Get a Brick Thrown At You
Saliem Fakir
11 January 2011

On the international scene South Africa plays diplomacy for high stakes. Often in the name of Africa and for itself, but this may receive some heckles from those who know that the game of diplomacy is mostly about enlightened self-interest, as the WikiLeaks diplomatic cables more than capably demonstrate.

South Africa's joining of the BRICS group (as it will henceforth be known since the announcement of South Africa's membership to the group on Christmas eve last year), involves some insertion and stretching that the country's inclusion will be good for the entire African continent. The origins of the BRICS relationships can be traced to historical ties of mutual support that the South African liberation movement enjoyed with the ruling forces in India, China and Russia -- at least, during the anti-apartheid struggle years.

Since these ties go back a long way, they have played an important role in South Africa's acceptance within the BRICS group -- this, despite Africa's largest economy being an economic minnow. But South Africa also had some work to do to get there.

South Africa has used its weight in vital peace-making roles and humanitarian assistance in key hotspots on the continent as a way of building its international profile. For this it has received applause.

These networks, built over time, are vital to the BRICS countries, as they grow their involvement on the continent. In this respect, South Africa may serve as a useful sounding board on strategy and dealing with conflicts in the region.

The second area, which South Africa has used to build credibility, is the reliance on its image of being the 'good example' for the rest of Africa because of its liberal political environment and democracy.

Its tutelage role for democracy has often been egged on by some parts of the international community, but not without some irritation on the continent itself. Onlookers fall between those with envy and those with genuine admiration.

South Africa's credence has also given it a certain moral authority to speak on issues concerning Africa. Whether the country deserves this or has this right to do so is another matter.

However, on the economic front and delivering development for Africa, there may be a different story to tell.

The South African state's diplomatic agenda may not be very well aligned with that of South African private capital looking for greater profits on the continent.

These commercial inroads have not always been welcomed, but the demand for goods, new sources of finance and lack of capacity within various African economies has made many African countries vulnerable to new economic suitors even though they may drive hard bargains.

But, as South African corporations have come to know, profits are not only for their taking. They are also facing stiff competition with state enterprises and large multinationals from other BRICS countries, never mind the continued presence of corporations from old powers. How these tensions will be dealt with within the BRICS group is still to be seen.

Even then, the positioning of South Africa within BRICS to leverage its own stakes in Africa will not go without contest from other aspiring African countries. External rivalry that comes with resources from non-African countries will only stir the hornet's nest and serve to juice the internal competition.

Contenders are already multiplying. Nigeria, Ethiopia, Kenya, Rwanda, Egypt, Senegal and Algeria are all vying for similar stakes. Their aspirations may belie the ability to achieve stronger political leadership and economic roles soon, but nevertheless they will not simply disappear either despite South Africa being in a better position to exploit the gap at present.

On the economic front there may well be other realities to confront. Some predict that Nigeria is more than likely to surpass South Africa's GDP in a decade or so.

Others will challenge the usual trope or perception that South Africa alone can be the sole gateway to Africa. Senegal is contending for that role in West Africa, as well as certain North African countries within the ambit of the Mediterranean region linking Africa and Europe, and then there's also Kenya in East Africa and Mauritius in the Indian Ocean.

On the question of whether South Africa can be a role model and promoter of Africa's social and economic development you may find murmurs of discord with such a proposition. South Africa's own internal development agenda is a very long mile to be walked.

Human Development Index and gini-coefficient indicators show some African countries doing better than South Africa. This is certainly true for education. Despite the nominal improvement in matric results this year, South Africa regularly records appalling school results and particularly poor science scores.

This being said, the BRICS countries are also odd bedfellows in their own respect.

While China demonstrates the great ability to show economic success and take a considerable number of its poor out of poverty, the Communist Party has a strong hold on political life. Economic freedom is exchanged for party authoritarianism.

Russia's politics is best described as an oligarchy run by a mix of mafia like tactics and secret service men.

And, while India is the largest democracy in the world, it is closely aligned to the US on military and security policy in the Asia region. This has always drawn China's caution and suspicion.

Then there is the irony of all ironies: India and China have strong ties and trade relations with the military dictatorship in Myanmar, which has constantly violated human rights.



Brazil for its part, sees its future closely tied with Latin America, but is reluctant to go the populist Bolivarian route that Chavez is championing in Latin America. The discovery of vast new oil reserves off the Brazilian coast has only emboldened Brazil's internationalism and desire for market expansion.

Given the big difference in GDP between South Africa and the other BRICS countries (by a factor of four or five), South Africa has a better fit with Mexico, Turkey, Malaysia and South Korea than it does with the BRICS countries on the basis of GDP measures alone (then too, even their economies are two or three times bigger than our own).

Besides all the usual political banter there is seemingly no compelling reason why South Africa is expected to benefit more than it's already gained by being a member of the G20.

Firstly, economic benefit arguments do not wash, as South Africa already has strong bilateral economic and trade ties with each of the BRICS countries and the financial flows vary from each.

Certainly, China's play is far wider than South Africa. It has interests in the whole of Africa and South Africa is but one player. Its flow of investment and trade is primarily for key resources such as oil and strategic minerals. In this respect, Angola and Sudan are bigger beneficiaries of Chinese investment than South Africa.

Secondly, when it comes to global governance it seems the G20 is probably becoming far more influential than the BRICS, despite its diluted efforts. Recent G20 meetings have been more in the nature of talk rather than any real attempt to tackle global governance issues. Nonetheless, the G20 looks more likely to be turned into a proper decision-making body than the BRICS group.

Thirdly, South Africa is not exactly "on a limb" when it comes to having special exchanges and sharing views with the BRICS countries. South Africa has an observer seat on the UN Security Council on which Brazil, India, China and Russia also sit. It has special bilateral commissions with each of the BRICS countries and shares a trilateral commission with Brazil, and India through the IBSA forum. Notwithstanding the fact that all other BRICS countries are also members of the G20.

So, what explains all this BRICS enthusiasm?

There can be only two reasons: 1) South Africa's own pretence of exceptionalism within the African continent makes it vulnerable to big league mentality or simply it wants to reinforce its pre-eminence and entrench greater political influence on the continent; and 2) South Africa's own activities in key parts of the African region makes it a trusted partner and always useful when the BRICS countries carve their economic pie in the region, in which case, they have an African ally to tag along.

But there are potential downsides. The BRICS countries themselves are not without political and economic rivalry even though the BRICS formation may confer a semblance of congeniality.

South Africa may find itself caught up in their political and economic conflicts as rivalries play themselves out in their own regions and within the international system.

Each of the emerging economies has different diplomatic approaches, as well as economic and development strategies when working with Africa. Some of these may not be consistent with South Africa's human rights culture. Moreover, South Africa is unlikely to influence a common approach to economic development for Africa in line with New Partnership for Africa's Development (NEPAD) goals, as discussions in the BRICS group are not binding agreements.

Some of these development related conflicts involve the reluctance to use local labour on infrastructure projects, the dumping of cheap goods that affect domestic industries, displacement of communities because of land grabs and conflicts over the extraction of energy resources.

South Africa may be caught in a moral dilemma over these issues. Indeed, like it did with the Dalai Lama and the conflict in Myanmar. It can't pretend to be the beacon of democracy in Africa as well as potentially complicit in undermining it elsewhere.

Conflicts over social, economic and human rights in our own backyard may unleash a backlash against any of the violating BRICS countries ending up alienating and isolating South Africa on the continent.

The next BRICS summit, where for the first time South Africa will participate as a member of the group, is scheduled for April in Beijing. However, having formalised our participation within the BRICS group, we should treat every step with some caution as we may lose friends and embolden enemies.

Fakir is an independent writer based in Cape Town.

http://allafrica.com/stories/201101110877.html

South Africa: Nation's Entry Into BRIC - a Cherry On Top
10 January 2011

Pretoria — South Africa's invitation by BRIC (Brazil, Russian Federation, India, China) to join the bloc as a full member will propel the country to new heights.

"It can expect to boost investment and trade opportunities for the country, as it has done for the other four states comprising the informal grouping," says International Marketing Council of South Africa's CEO, Miller Matola.

SA, which got an invitation to join the powerful bloc of emerging economies, had a combined GDP of R18 trillion late in December.

BRIC will account for 61 percent of global growth in three years time, according to the International Monetary Fund.

"The fact that South Africa has the opportunity to be affiliated to this group of powerful emerging economies underlines two main points. The country is recognised as a developing economy of significance in its own right, but also that it is the gateway to the continent of Africa - the next growth superstar," expressed Matola.

Matola believes that this is a good step for South Africa, not only economically but also politically. He said a new world order is unfolding where economic clout and therefore political power is shifting from West to East, with the BRIC countries as the visible face of this movement.

South Africa, along with other emerging economies, has long been punting for a greater role in international organisations like the IMF and the World Bank.

The invitation to join BRIC, combined with its renewed membership of the Security Council, will enhance its influence in this regard too, added Matola.

"Huge new opportunities will open up for South Africa on the investment and trade front. Private companies may also find market access into the BRIC countries easier and partnerships with companies from this grouping might evolve.

"This might become particularly important as South Africa is already the biggest emerging economy investor in the continent and its companies are active in at least half of all African countries," Matola stressed.

Joining BRICS will also mean that South Africa must use these new opportunities to increase its competitive edge.

Last year, the country's ranking in the Global Competitiveness Index (GCI) of the World Economic Forum (WEF) dropped, but its performance has in fact remained stable.

Rather, the decline reflects improvements from other countries and their ability to spur growth.

"South Africa will play in a different league and as such, will have to improve its delivery and performance," says Matola.

"To draw South Africa into this powerful club underlines the country's growing international role and its future significance for those who want to make use of the expanding African opportunities.

"It is, in fact, an association that does not only benefit the group, but the emerging world as a whole and Africa, in particular," said Matola.

It is expected that South Africa will be accepted formally as a new BRIC member at these emerging powers' next summit in April.

http://allafrica.com/stories/201101110139.html

heres one for the Dr Professor of economics maskerading as a Journelist

TWP looks to Philippines, Turkey, China sourcing, South Africa ‘too expensive’
1 COMMENT | COMMENT PRINT
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By: Martin Creamer
18th January 2011

Updated 4 hours agoTEXT SIZE Mining and minerals project house TWP is looking closely at procuring goods and services from countries that “have a more competitive cost base than South Africa”, including the Philippines, Turkey and China.

TWP chairperson Nigel Townshend says that the company within the JSE-listed Basil Read group is lining up alternative procurement sources because “South Africa is becoming very expensive, not just in engineering, but generally, and the exchange rate’s certainly not helping".
The former TWP CEO, who is now fulfilling a strategic role of charting the group’s course in the construction industry, which is expected to go through a difficult passage in the next 12 to 18 months, says: "We are having to become a lot smarter.”

TWP is already experiencing a shortage of engineering staff in South Africa, even though business has yet to return to the heady pre-meltdown boom times of a few years ago.

New TWP CEO Digby Glover says that the company will apply itself in the areas where it is competitive and outsource aspects of work where it is not competitive.

An area of strong competitive advantage is managing deep-level vertical shaft projects, and the company is becoming increasingly active globally in this niche.

“We’ve just picked up a job in Poland at a coal mine that’s being accessed via a kilometre-deep decline, so there’s huge value to add there using South African shaft-sinking technology” Glover tells Engineering News Online.

Most of TWP’s current work – on projects worth “well in excess of R100-billion” – is on definitive feasibility studies, including those related to the expansion of the Venetia diamond mine for De Beers, the development of Shaft 18 for Impala Platinum and work for Kumba Iron Ore.

The studies for these robust projects are expected to be completed in six to 12 months.

“We’re moving ever closer to that hectic period of two to three years ago. Copper is looking extremely good at this stage, iron-ore is going through the roof, platinum is always strong, coal is picking up for us, gold is becoming interesting north of our borders, wer are more active in Australia and there is huge potential in Peru,” Glover adds.

With its current 850 staff complement increasing at a rate of 20 to 25 people a month, TWP is keen to joint venture, acquire and unlock synergies with other project houses, in order to increase its capacity cost-effectively.

Most of the work it does follows the engineering, procurement, construction and management (EPCM) model.

Last year TWP signed an agreement with Anglo American, which establishes it as a “tier 1 EPCM” supplier to the diversified mining major in Southern Africa.

The tier 1 selection gives it an opportunity to serve across the multi-commodity Anglo group, after having done so for Anglo Platinum in particular for the past 28 years.

As more Chinese project capital is invested in South African mining and mineral projects, TWP is preparing to optimise its dealings with Chinese project companies.

TWP deputy CEO Franco Pellegrini reports an abundance of investment from China, but by no means all of it in mining and minerals.

For instance, TWP’s architectural division has just won an assignment at a prominent site in plush Sandton, close to the new Gautrain station.

“All of a sudden, Chinese investors seem to be buying up properties all over town,” Pellegrini comments.

Edited by: Creamer Media Reporter

It's interesting how the BRIC is now divided between it's political union and the marketing acronym invented by Jim O'Neil. While the political one invited South Africa that was rejected by the O'Neil who seems intent on expanding the group to now include Mexico, Turkey and Indonesia.

who gives a shit about Jim on neil and what he thinks? if the members who have formed a union believ sa should join then its their call, they dont need approval from jim. They obvioulsy see SA as a natural fit in order to cover Africa which is the last un exploited and un cimmercialised place on earth, hese chinese and indian intrest for years

I laugh that some guy called jim belives he has the power to decide how joins BRICS.

Totally agree. He mistakenly believes that because he coined the term, he has a right to determine its membership. In fact, perhaps the grouping should be referred to as 'CRIBS', seeing that the members are the future cradle of the world's economy. That way, O'Neil won't be referred to virtually every time the term is mentioned, and he won't have delusions of determining who joins.

^^lol @ CRIBS, classic...

The fact that there is so much animosity and jealosy about SA joining perhaps shows that it IS in fact quite an honour and something of a windfall for us, that the BRICS are now becoming something that needs to be recognised and noticed.

That o'neill dude should go and make up acronyms for something else.

Heres one - POES.

At present, he is the only member...

Digger you dog. LoL....

^^Haha
P - person
O - often
E - engaging (in)
S - sh*t-talk

Bit of a fetch I know...

The fact that there is so much animosity and jealosy about SA joining perhaps shows that it IS in fact quite an honour and something of a windfall for us, that the BRICS are now becoming something that needs to be recognised and noticed.

That o'neill dude should go and make up acronyms for something else.

Heres one - POES.

At present, he is the only member...


:lol:

^^Haha
P - person
O - often
E - engaging (in)
S - sh*t-talk

Bit of a fetch I know...

but good neverthe less

Looks like SA is priming itself to be the 'great stateman' and Big Brother...

------------

South Africa aid agency to launch in 2011
Thursday, 20 January 2011

South Africa will launch its own development aid agency in 2011 in a move likely to boost the country's status as an emerging economic power and champion of the African continent.

The South African Development Partnership Agency is expected to become operational before mid-2011 and will work with other donor agencies to coordinate development programmes, mainly on the continent.

Although the government is hoping for contributions from the private sector, most of the funding will come from public money, said Dr Ayanda Ntsaluba, Director-General of the Department of International Relations and Cooperation.

"South Africa is in a unique position - we're recipients of development assistance, and we're anxious that that status be preserved. At the same time ... we're in the African continent and in that context we occupy a relatively privileged position," Ntsaluba told IRIN.

Post-conflict reconstruction
Since 2001 the South African government has channelled its aid contributions through the African Renaissance Fund (ARF), which is administered by the department. Much of the assistance provided by the ARF has focused on conflict resolution and peacekeeping in various countries, including Mali, Zimbabwe, Burundi and the Democratic Republic of Congo.

"What became clear as we moved on is that we need to look beyond conflict resolution into largely post-conflict reconstruction, and that begins to involve many other departments and arms of state," Ntsaluba said.

Although the mandate for the new agency was still in draft form, he said South Africa would continue providing assistance to countries recovering from conflict.

The Democratic Alliance, South Africa's opposition party, has criticised the ARF for supporting "rogue" states and failing to monitor how its funding was being spent.

Ntsaluba responded that countries emerging from conflict often required the most assistance. "There will still be residual elements in those countries that triggered the conflict in the first place, but if we waited until it was all perfect then we'd be of no use to those countries."

He conceded that the tracking of ARF funds had not been optimal, partly because the responsibility for administering projects had been spread across several departments. The new agency would be set up as a separate institution, with the administrative capacity to track and oversee all the programmes it funded.

Not just altruism
Ivor Jenkins, co-director of the non-profit South African-based Institute for Democracy in Africa (IDASA), said his organization had been lobbying for the creation of an aid agency, so as to provide a more appropriate framework for South Africa's current ad hoc interventions on the continent.

"We think it is long needed and required for South Africa because we are the biggest economic bloc on the continent and we have started to do quite a bit of aid support to different countries," he told IRIN.

"I do think it's important for us as a country to start to have a sense of responsibility, and giving and not only receiving as we have for many years," he said. Besides its humanitarian agenda, the agency would likely also serve as an expression of South Africa's foreign policy agenda.

Ntsaluba confirmed that the decision to set up an aid agency was "not only a reflection of altruistic motives, but of how to advance South Africa's own interests".

South Africa was recently invited to join the BRIC (Brazil, Russia, India, China) group of major emerging markets. Jonathan Glennie, a research fellow of the Centre for Aid and Public Expenditure at the UK-based Overseas Development Institute, commented that other developing countries, such as India, China and Brazil, seeking to raise their international profile and strengthen political and trade ties, had also set up aid agencies in recent years.

"Aid is not just about reducing poverty, it's a very strategic investment," he said. "To become a big player, you need your own aid programme."

Ntsaluba said the government had consulted a number of Western development agencies on the best approach to managing aid programmes.

Glennie noted that the South African government could pre-empt concerns about corruption and mismanagement of funding on the African continent by creating "the most transparent aid agency in history".

Source: IRIN News

http://www.africagoodnews.com/development/aid/2399-south-africa-aid-agency-to-launch-in-2011.html

I like it. Make it completely transparent to torpedo the inevitable, instantaneous corruption allegations.

We give plenty of aid - at least make it known and visible.

^^lol @ CRIBS, classic...
Viva to Roman! Like it. :cheers:

^^ one word: ghetto :lol:

With all the talk that SA doesn't deserve BRICS membership, and that Egypt (Should Egypt be the next Bric? January 13, 2011: http://blogs.ft.com/beyond-brics/2011/01/13/should-egypt-be-the-next-bric/) and Nigeria (Where is Nigeria? South Africa invited to join BRIC. Dec 24, 2010: http://www.afripol.org/afripol/item/215-where-is-nigeria?-south-africa-invited-to-join-bric.html) are more worthy contenders, I thought I would compare the three countries on important indices.


------------------


COMPARISONS BETWEEN AFRICA’S TOP 3 COUNTRIES



POPULATION

NIGERIA 2010 – 152m [Nigeria's population is expected to grow to 202,9 in 2025, and 278,8m in 2050]
EGYPT 2010 – 80m [Egypt's population is expected to grow to 94,7m in 2025, and 113,8 in 2050]
SOUTH AFRICA 2010 – 50m [SA's population is expected to be 43,7 in 2025, and 47,3 in 2050)

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WORLD BANK CLASSIFICATION

SOUTH AFRICA: Upper-middle income economy
EGYPT: Middle income economy
NIGERIA: middle income economy (as of Nov 2010; before then, Nigeria was ranked as a low income economy)

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CURRENT AND PROJECTED GDP NOMINAL (I.E, CURRENT EXCHANGE RATE), AS PER INTERNATIONAL MONETARY FUND

SOUTH AFRICA
GDP (NOMINAL)

2010 354.414
2011 366.174
2012 384.426
2013 405.393
2014 429.242
2015 455.141


EGYPT
GDP (NOMINAL)

2010 216.830
2011 239.241
2012 261.541
2013 285.477
2014 311.339
2015 340.838

NIGERIA
GDP (NOMINAL)

2010 206.664
2011 232.969
2012 254.982
2013 278.494
2014 299.581
2015 321.832

----------------

GDP PPP

SOUTH AFRICA GDP PPP

2010 524.341
2011 549.606
2012 578.609
2013 611.894
2014 649.689
2015 690.954

EGYPT GDP PPP

2010 498.176
2011 532.568
2012 570.581
2013 613.249
2014 662.299
2015 717.885


NIGERIA GDP PPP

2010 374.323
2011 407.427
2012 442.710
2013 481.159
2014 519.220
2015 560.065

-----------

GDP PER CAPITA

SOUTH AFRICA
GDP per capita
$5,684 (2009) (nominal)
$10,136 (2009) (PPP)

EGYPT
GDP per capita
$5,500 (PPP) (2008 est.)

NIGERIA
GDP per capita
$2,500 (2010 est.)

----------------

GOVERNMENT REVENUE AND EXPENDITURE (based on prevailing USD exchange rate during respective year)

SOUTH AFRICA

2008 REVENUE: 83,850.0
2008 EXPENDITURE: 83,300.0

Public finances
Public debt 35.7% of GDP (2009 est.)
Revenues $74.92 billion (2009 est.)
Expenses $86.26 billion (2009 est.)

EGYPT

2008 REVENUE 40,460.0
2008 EXPENDITURE 51,380.0

Public Finances
Public debt $28.84 billion (31 December 2008 est.)
Revenues $50.95 billion (2009 est.)
Expenses $63.39 billion (2009 est.)

NIGERIA

2008 REVENUE 29,490.0
2008 EXPENDITURE 30,610.0

Public Finances
Public debt 17.8% of GDP (2009 est.)
Revenues $10.49 billion
Expenses $18.08 billion (2009 est.)

--------------

EXPORTS (Source: CIA Factbook)

SOUTH AFRICA $67,930b 2009 est

NIGERIA $45,430b 2009 est.

EGYPT $22,910b 2009 est.

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IMPORTS

SOUTH AFRICA $70.24 billion (2009 est.)

EGYPT $56.43 billion (2008 est.)

NIGERIA $42.1 billion (2009 est)

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STOCK MARKET CAPITALIZATION

SOUTH AFRICA $925b (year end: Dec 2010)

EGYPT $84.27b (year end: Dec 2010)

NIGERIA $56.7b (current: Jan 2011)

-----------------

OTHER FACTORS / STRENGTHS / WEAKNESSES

SOUTH AFRICA

South Africa’s financial, legal, and transport system is the most advanced in Africa. It is a stable democracy, although the country witnessed unprecedented xenophobic violence briefly in 2008, and experiences relatively high crime levels. Its strategic location (midway between the East and West, especially in relation to linking South America to Asia, as well as offering an alternative route to the Suez Canal) makes it an important player re: facilitating global trade.

South Africa is the only African country to be a member of the G20 nations (Group of Twenty Finance Ministers and Central Bank Governors) that meets annually to discuss global financial affairs. It is also the only African country invited to G8 summits, along with other key emerging market players (China, India, Mexico, Brazil). Together this group is referred to as the G8+5.

The South African rand is the most actively traded emerging market currency in the world. It is a member of the elite club of fifteen currencies, the Continuous linked settlement (CLS), where forex transactions are settled immediately, lowering the risks of transacting across time zones.

South Africa is projected to have a slow population growth rate over the next 20 years, and its economy is projected to grow at between 3-5% PA for the foreseeable future, which is reasonable compared to developed economies but slow compared to developing country peers.

EGYPT

Egypt is a de facto single-party state (the main opposition party is banned) which experiences occasional religious strife and terrorist attacks. It is the most populous Arab country in the world and is the only country that straddles the African and Asian continents. Its strategic location (owner and operator of the Suez canal [which links the sea routes of Asia and Europe], which constitutes a major source of government revenue) makes it an important player re: facilitating global trade.

Egypt's population is projected to grow at a healthy rate over the next few decades, and its economy is projected to grow in excess of 6% PA.

NIGERIA

Nigeria is a democracy which experiences occasional religious strife and terrorist attacks. It has vast oil resources and is the most populous country in Africa. Corruption is considered endemic in Nigeria.

Nigeria's population is projected to grow at a healthy rate over the next few decades, and its economy is projected to grow in excess of 7% PA. However, this growth is tied to the price of oil as Nigeria's economy is not diversified.

My personal opinion is that SA is currently the best and most appropriate African country for BRIC membership. Its indicators (except for population and economic growth rates) dwarfs Nigeria and Egypt. Heck, its stock market alone is 650% the size of Nigeria and Egypt's stock markets combined (in fact, it's more than 500% the size of all the other African stock markets combined!).

Nigeria and Egypt are undoubtedly rising stars and their economies will almost certainly eclipse SA's over the next decade or two. However, based on current criteria, SA is still champ. Thus, current BRIC members had a choice: wait at least one or two decades for Egypt and Nigeria to reach SA's current economic and political status on the global stage, and then invite them, or accept the biggest current African member now (which will still be a top 3 player on the continent 2 decades down the line). They opted for the latter and I think it was a good decision. They have the prerogative to expand their membership to include Nigeria, Egypt (heck, even Indonesia, Mexico, Turkey, South Korea, etc) later. Thus, in my opinion, O-Neil and other SA-detractors should chill. SA's has earned its stripes to be a BRIC member. Now let's hopefully see our new status benefit us.

And its not just that - I mean, Nigeria has one string to its bow - oil. Not exactly a healthy proposition looking at current trends and looking forward past the next 5 years...

Egypt as well, not so diverse, and basically a one-party state as listed by the article.

And in terms of infrastructure, there is no comparison.

On top of which, we ARE now a BRIC (S), so all this speculation is pointless.

Major public riots and protests are currently underway in Egypt, inspired by the overthrow of the Tunisian government last week, which was similarly corrupt and autocratic. Twitter and Facebook (which were used to organise protests) were banned by the Egyptian government yesterday, but seem to have been restored again (for how long, I wonder?). Egyptian pound and the Egyptian stock market are likely going to freefall in the days ahead, as they have since the Tunisian riots began. I don't think Jim O'Neil saw that coming.

Compiled by the Government Communication and Information System
Date: 25 Jan 2011

Title: SA must proceed cautiously with BRIC countries, say analysts

Cape Town - South Africa's invitation to join the exclusive Brazil, Russia, India and China (BRIC) grouping has been welcomed by many but some analysts caution that the country needs to tread carefully if it is to avoid being taken advantage of by its much larger fellow BRIC members.

Last month, South Africa was invited by the BRIC (Brazil, Russian Federation, India, China) to join the grouping and for President Jacob Zuma to attend its next summit to be held in Beijing in April.

South Africa, which is ranked as the 27th largest economy according to the International Monetary Fund (IMF), is dwarfed by China, the second biggest economy in the world after the US; Brazil the eighth biggest economy; India, which is ranked 11th and Russia the 12th largest economy. .

Mzukisi Qobo, who heads the emerging powers programmes at the South African Institute of International Affairs (SAIIA), warns that it is important for the South African government to devise an effective foreign affairs strategy if the country is to benefit from being a BRIC member.

He believes that there has been no sign - even in the Department of International Relations and Co-operation's White Paper on Foreign Policy submitted to Cabinet last year - that the South African government has held a serious process to map out how it will contribute to and benefit from being on the informal BRIC forum.

But the department stands firm that it has has developed a strategy on how it will relate to other members of BRIC.

International Relations Deputy Director-General for Public Diplomacy, Clayson Monyela, says the department has also looked at how it will use its BRIC membership to forge a new foreign policy strategy.

The department has also studied a number of key areas that BRIC countries are involved in, including their respective development banks, their role in bilateral meetings and G20 meetings, involvement of civil society and research institutions.

A Standard Bank research paper, released in November last year, predicted that the BRIC's share of Africa's total trade would increase from one-fifth to one-third in the next five years, with China making up more than half of all trade with the continent.

Some who say China's inroads into Africa may represent a new plundering of Africa might remain sceptical of South Africa's invitation to join the BRIC grouping, arguing it may signal a new run on the country from BRIC member countries.

But, Standard Bank chief economist, Goolam Ballim, believes that the move does not represent a new threat of neocolonialism in Africa. Ballim does, however, caution that South Africa needs to "keep its eyes wide open" when it attends the BRIC summit in April.

He says the risk if South Africa did not bargain hard, was that other, more sizeable BRIC members could take advantage of the country and the continent as a whole - all the more so as Africa lacks cohesive partnerships.

African countries have to steer away from the perception that BRICS would "lean more sympathetically" to them when it came to trade and economic issues.

South Africans have to realise that membership in the BRIC forum will not result in an automatic inflow of billions of rands in foreign direct investment, Ballim warns.

He says foreign investors are particularly astute and have a qualified mandate that precludes them from being tripped by the "veneer of BRIC".

Despite concern that South Africa could lose out to other BRIC members when it came to trade and investments on the continent, an earlier Standard Bank research paper released in July last year, titled "South Africa: leading or lagging the BRICS' thrust in Africa?" argued that despite increased trade by BRIC countries to Africa - particularly China - South Africa was still in a better position.

The report pointed out that South Africa still had historical and logistical advantages over Southern Africa when compared to other BRIC members and that the proposed merger of the Common Market for Eastern and Southern Africa (Comesa), Southern African Development Community (SADC) and East African Community (EAC) trading blocs, would support the country's move to increase regional trade.

Building on the benefits of regional integration would remain key to South Africa exacting great benefit from being part of the BRIC club, says emerging markets expert Martyn Davies.

Davies, the chief executive of Frontier Advisory, argues that the "S" in "BRICS" should really represent SADC, which had a market of over 250 million people - bigger than that of Russia and Brazil.

He says one way to speed up regional integration is to integrate capital markets by, for example, opening the Johannesburg Stock Exchange (JSE) up to include companies in the entire SADC region.

He says companies based outside of South Africa stood to benefit from such a move, particularly as 95 percent of portfolio investment inflows on the continent were to the JSE.

Davies dismisses those skeptics that may interpret South Africa's invitation to join the BRIC forum as a bid by its existing members to re-colonialise Africa, adding that more than anything, China's demand for resources had helped at least triple growth on the continent.

Similarly, Professor Steven Friedman, director of the Centre for the Study of Democracy, says he was not convinced that China's invitation to South Africa to join the BRIC forum was based solely on an attempt by members to take advantage of Africa.

He points out that China and India have demonstrated that they are very capable of forging business links on the continent without the help of South Africa. Added to this was the very "ambivalent attitude" that the rest of the continent held towards South Africa, he explains.

"South Africa would gain more from being in BRIC than BRIC members would gain from us," says Friedman.

Despite this, he says the other BRIC members still saw a significant benefit in South Africa being a part of the exclusive club.

He points out that while the continent has about five percent of the economy, it produced 26 percent of its output.

"They want us in, as they see us as an economy with immense potential, given support," says Friedman.

Analysts point out that Africa's most populous state, Nigeria, has the potential to pass South Africa's economy soon.

A report, "The World in 2050", released earlier this month, predicted Nigeria's growth would average 7.9 percent between 2009 and 2050 - compared to South Africa's 5 percent.

Nigerian Ayodele Akanbi, a senior economist at Pan-African Capital, says one could not compare Nigeria with South Africa.

He believes Nigeria's economy should be ahead of South Africa's if it were able to "get itself together" but has been hamstrung by poor political leadership and corruption.

Akanbi also believes South Africa's invitation to join the BRIC forum was not a precursor to a new colonialisation of Africa. - BuaNews

http://www.buanews.gov.za/news/11/11012510251003

Seems O'Neil has coined a new country grouping phrase for investors and the media: MIST (Mexico, Indonesia, South Korea, and Turkey). Perhaps he should throw in Yemen, then he can term it MISTY. :lol: I personally prefer the rock-solid imagery conveyed by the term BRICS vs the airy-fairy feel of MIST.

Interesting article below. Highlights that some commentators argue that India has lessons to learn from SA (vs fellow BRICS countries like China and Russia), and that O'Neil's (and others') fixation on large GDP size is misplaced when we should be focusing instead on benchmarks such as the extent of a country's adherence to the rule of law, social justice, size of carbon footprint etc.

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Long live BRIC, welcome MIST
By Sreeram Chaulia

After setting the terms of discourse in world affairs at the turn of the millennium with the coinage, "BRIC" (Brazil, Russia, India and China), Jim O'Neill - the former chief economist of Goldman Sachs - has just kick-started the new decade with a fresh acronym: "MIST" (Mexico, Indonesia, South Korea and Turkey).

The catchiness of a four-country grouping which can be uttered in a simple abbreviated form that can play on every stakeholder's lip has proven a sure hit with BRIC, which captivated the investor community and shook global geopolitics. Whether MIST can achieve the same haloed status as a byword for high, guaranteed return on money and as a harbinger of further redistribution of power in the international system remains to be seen.

O'Neill, who is now chairman of Goldman Sachs Asset Management, believes that these four distinct economies deserve to be uttered in the same breath because each of them fulfills the size criterion of accounting for more than 1% of global GDP in nominal terms. He also expects the MIST economies to rise further in size and hence makes the case for them to be taken seriously as growth markets.

O'Neill has an uncanny knack of timing his neologisms to coincide with large pools of investment funds seeking new opportunities and pastures. The magical and solid-sounding BRIC helped channel enormous sums of capital into its constituent countries at a time where interests rates were low globally and money managers were on the look out for higher yielding destinations in Asia. BRIC countries themselves seized upon O'Neill's phrase and engaged in their own BRIC heads-of-state summits, BRIC investment forums, and BRIC academic seminars to cash in on the euphoria.

Today, with interest rates at an all-time low in advanced economies, MIST might just prove to be another hit as investors buy into O'Neill's growth markets advice for engineering a long-term realignment of capital flows in their direction.

South Korea, Indonesia and Turkey have already become targets of "hot money" infusions since the economic crash of 2008 and their respective governments have been installing checks to prevent excessive short-term speculative movements that may hurt their macroeconomic stability. The "MIST" concept could well hurt their immediate efforts to limit unmanageably large sums of capital rushing in, but hardly any contemporary government will pass up a chance to be paraded as the ideal new place to do business.

Fast growing economies in Asia love nation-branding and image-burnishing through certification from Western opinion-making citadels like Goldman Sachs. This month, Moody's raised Indonesia's credit rating to a 13-year-high of "Ba1", which is just one step below investment grade and right behind the positions of Brazil and India.

But the authorities in Jakarta were dissatisfied and issued statements to the effect that their country deserved better and that they will strive to get the coveted investment grade in 2011 from all the principal Western rating agencies. O'Neill could well have framed the most seductive new term in international business from the perspective of MIST's members.

Critics abound of the BRIC concept and it is obvious that doubts will also be raised about MIST as a hodgepodge that lacks unit homogeneity and does not match basic comparative metrics. The differences in liquidity within the MIST stock markets, per capita incomes, as well as the varied forms of capital controls and macroeconomic models adopted by each of these four countries will be thrown up to contend that O'Neill is indulging in gimmickry or crass salesmanship.

Indian economist Ila Patnaik wrote last year that democratic India had a starkly contrasting governance environment compared to authoritarian China and Russia, and that BRIC is a "meaningless" group for mutual learning of policy lessons. She advocated, instead, that India learn from "countries more like us", ie democracies such as Brazil, South Korea, South Africa and Turkey. If her line of thinking were advanced, India has more in common with MIST than with the rest of BRIC.

Still, all the BRIC countries together decided that size of gross domestic product and potential for growth were sufficient minimum common denominators on the basis of which they could carry across ideas and best practices for piloting their respective rises in the global economy. Despite O'Neill's detractors, his BRIC prophecy has been self-fulfilling and MIST promises to follow suit.

One of the less understood consequences of O'Neill's investor-advice catch phrases is their capacity to break understood notions of who dominates the world order. In hindsight, we can now see that the "unipolar moment" of the 1990s ended in the previous decade thanks to popularization of the term BRIC.

When Russia, China, India and Brazil lay prostrate and the US economy was "roaring" in the nineties, as economist Joseph Stiglitz put it, the international power configuration was decidedly unipolar. Once BRIC picked up momentum and began registering rapid growth (partially as a result of O'Neill's prognosis that appealed to foreign investors), it came home that we no longer lived in a world with a sole superpower.

Size does matter in measurement of power, no matter what the internal divergences are among BRIC or MIST countries. The more BRIC and MIST grow in GDP size, the greater their capability to convert economic resources into military and soft power gains. No one can gainsay the fact that BRIC countries' militaries grew in power projection abilities and technological know-how over the last ten years as a direct result of their economic growth.

Defense outlays, which are measured as a percent of a nation's GDP, proportionally increase as an economy grows. Likewise, the resource base with which a state can drum up goodwill and win more friends by playing a more global role is economic in nature. If public diplomacy divisions of foreign ministries of the "emerged" countries are to be effective, the bottom line is how big their war chests are and how well they are complemented by their respective national capitalist classes.

Fixation with GDP has rightly been lambasted by followers of alternative yardsticks of a nation's worth, such as low carbon footprints, prevalence of rule of law and social justice, lesser income inequalities, better human development indices, and even maximum levels of "gross happiness" among the citizenry.

But Jim O'Neill knows the pulse of the current international political economy better. A compact between states and markets exists wherein the pursuit of GDP growth has been set in stone as the most desirable trait which will be pursued at any cost, even it means producing vast multitudes of losers in society.

In imagery, MIST evokes a vapidity unlike the tactile and reassuring BRIC. But symbolism aside, the former might redefine the second decade of this century by distributing hard and soft power even more horizontally across the globe. The word "multipolarity" will have a more populated and dense sense if MIST (plus some inevitable additions and self-nominations that will be inserted as more medium-sized economies grow in Asia, Africa and Latin America) becomes the toast of policymakers.

Sreeram Chaulia is Vice Dean of the Jindal School of International Affairs in Sonipat, India, and the author of the forthcoming book, International Organizations and Civilian Protection: Power, Ideas and Humanitarian Aid in Conflict Zones (I B Tauris).

(Copyright 2011 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)


http://www.atimes.com/atimes/South_Asia/MA26Df02.html

Re: whether SA’s membership in BRICS is justified…

I think SA can make its BRICS membership count (and silence its detractors / critics) if it involves / represents its fellow 5-country Southern African Customs Union (SACU) and 15-country Southern African Development Community (SADC) members, the latter grouping of which represents roughly half of Africa’s landmass, a population of 234m (more than Russia and Brazil). In regard to the SACU, SA should push for the rand to become the formal common currency (it’s already the de facto legal tender in Lesotho, Swaziland, Namibia; also in Zimbabwe, which is not a member of SACU but a member of SADC, although Botswana will push back purely on grounds of national pride, not financial logic).

http://upload.wikimedia.org/wikipedia/commons/thumb/a/a9/SADC_and_SACU.PNG/300px-


The SADC already formed a free trade agreement with the 5-country East African Community (EAC - population: 125m; PPP GDP of $105bn) and 20-member Common Market for Eastern and Southern Africa (COMESA – population: 406m; PPP GDP of $736bn) to form the Africa Free Trade Zone (these economic blocs have over-lapping membership). SA is easily the giant, by a long shot, of this combined zone and, by extension, its de facto leader. As such, in my opinion, SA’s membership in BRICS is justified.

Other BRIC wannabes (such as South Korea, Turkey, Indonesia, and Mexico) can’t claim to represent anything close re: population and geographic area. In time, the Africa Free Trade Zone, through SA, should reach out to join forces with the Economic Community of Western African States (ECOWAS), the Economic Community of Central Africa States (ECCAS), and ultimately, seek to encompass the entire 53-member African Economic Community (EAC - estimated population: 1 billion; PPP GDP $2 trillion)



Seems my wish is coming true. This will be a huge boon for major SA corporates, who are virtually the only ones from Africa who can take advantage of this development. I'm sure SA hinted at this development to BRIC countries, which helped seal SA's inclusion in the group...

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Southern Africa: Region Moves to Set Up Free Trade Area
25 January 2011

The year 2011 will move southern Africa another step closer to becoming a regional community, as one of the building blocks of a united Africa with its African Economic Community.

This has been the vision of the continent's leaders for the past 60 years, and was agreed in writing 20 years ago when the AEC Treaty was approved by African Heads of State and Government in 1991.

Southern Africa is expected to take this step towards deeper regional and continental integration when three Regional Economic Communities (RECs) encompassing 26 countries in eastern and southern Africa - almost half of all African countries - approve a plan this year to establish a Grand Free Trade Area (GFTA).

A draft plan of action on the GFTA has already been approved by the tripartite secretariat, involving the Southern African Development Community (SADC), the East African Community (EAC), and the Common Market for Eastern and Southern Africa (COMESA).

The three RECs have endorsed the roadmap in individually as separate economic blocs at their Summits held in 2010.

This sets the stage for the historic GFTA agreement, expected to be approved at the Tripartite Summit of Heads of State and Government set for early this year. South Africa is expected to host the summit, and implementation is expected to begin as early as next year, in 2012.

The creation of a GFTA with a combined population of about 570 million people and a Gross Domestic Product of US$625 billion would open borders to literally half of the continent, spanning the entire southern and eastern regions of Africa, from Cape to Cairo.

This would facilitate the smooth movement of goods and services across member countries, boosting intra-regional trade and expanding business options and trade opportunities. .

SADC leaders are also expected to meet in August at their annual Summit of Heads of State and Government set for Luanda, Angola to chart the way forward to the launch of the much-anticipated SADC Customs Union.

The Customs Union, expected last year, was deferred to a later date to allow Member States to fully implement the SADC Free Trade Area (FTA) launched in 2008.

SADC Executive Secretary Tomaz Salomão said at the last Summit that "launching the Customs Union in 2010 is not possible. The question is what we can do as the way forward."

A Customs Union is a higher level of economic integration compared to a FTA. In contrast to a FTA, which has a common tariff regime internally but allows each country to maintain its own tariffs with non-SADC members, a Customs Union requires all members to have a common external tariff.

The COMESA and EAC already have FTAs and customs unions. The establishment of a single FTA by 2012 would result in the three groupings coalescing into a grand FTA with the ultimate goal of a single Customs Union.

In terms of regional projects development, southern African is expected to experience significant investment this year, particularly along the North-South Corridor following the approval of development funds.

The North-South Corridor traverses eight countries in east and southern African and is a combination of two traditional corridors - the Durban Corridor and the Dar es Salaam Corridor, linking the port of Durban and others in southern Africa with the eastern port of Dar es Salaam.

COMESA, EAC and SADC identified the corridor for the Aid for Trade programme because it is the busiest in the region in terms of values and volumes of freight.

Over US$1.2 billion was raised to upgrade road, rail and port infrastructure as well as to support trade along the North-South Corridor.

Tripartite Taskforce chairperson Juma Mwapachu, who is also the EAC General-Secretary, has already announced that preparations are at an advanced stage to launch a second One-Stop Border Post at the Namanga crossing between Tanzania and Kenya.

The Chirundu border post between Zambia and Zimbabwe was the first One-Stop Border Post, officially opened for business in November 2009.

The One-Stop border initiative is planned for implementation across all major border posts in the enlarged community so that there is smooth movement of goods and services among the 26 Member States.

Under the one-stop scheme, travellers are cleared just once for passage into another country in contrast with the current situation when they have to be processed on both sides of the border, addressing issues of delays experienced at most border posts as well as the often perceived "restrictive" operational procedures at borders.


http://allafrica.com/stories/201101260163.html

Jim O'neill is a sideshow bob, desperate to be relevant but actually just a guy who came up with an acronym that is now defunct.

On top of all the other stuff, take a look at the list of biggest banks and the like in Africa - South Africa is bigger than the rest of the continent combined...

Jim O'neill is a sideshow bob, desperate to be relevant but actually just a guy who came up with an acronym that is now defunct.

On top of all the other stuff, take a look at the list of biggest banks and the like in Africa - South Africa is bigger than the rest of the continent combined...

But he's right though, South Africa doesn't deserve to be in the BRIC ahead of countries like Indonesia, Mexico, Turkey or Argentina. Theirs no rational argument that can be put forward other than "it's the African economic hub". Their is a difference between the political union of the BRIC and China's invitation as opposed to the initial reason why BRIC was created. This is all political.

Again, that word 'deserve'. This wasn't a competition, like idols! Its not a matter of deserve.
It is simple. The countries that formed the organisation previously known as BRIC, decided they wanted South Africa as a member.
The organisation is now called 'BRICS.

They identified SA as the best fit, perhaps because of our vast natural resources, perhaps because of our infrastructure and position in Africa, perhaps as a political move.

Our inclusion will benefit them, more than other countries - that is what they decided. And it will certainly benefit us.

But he's right though, South Africa doesn't deserve to be in the BRIC ahead of countries like Indonesia, Mexico, Turkey or Argentina. Theirs no rational argument that can be put forward other than "it's the African economic hub". Their is a difference between the political union of the BRIC and China's invitation as opposed to the initial reason why BRIC was created. This is all political.

Actually, this was not a "political" decision. If it was, then countries that piss the West off (like Venezuela, Cuba, etc) would have been invited to the club, as none of the current BRIC countries (who see themselves as representing a counter-force to the West) have historically strong relations with the West (with the exception, to a small extent, of India and Brazil). Instead, this was a clever strategic decision for economic reasons on the part of the original BRIC members.

I'm not sure if you are aware of SA's dominance re: trade in the Sub-Saharan context, particularly the Southern and East African regions. If you read some of the posts above, you will see that the countries of Southern, East, and Central Africa are in the process of creating a massive free trade zone. This combined market exceed the populations of Russia and Brazil, and will rival India's and China's in the future. Africa is experiencing phenomenal growth rates and is seen as the "next Asia" (i.e., it represents a large, untapped market). SA easily represents the gateway to these markets by any economic measure (it's the largest investor on the African continent, after China) and BRIC countries know this. As an example of SA's strategic importance for BRIC countries, India is currently negotiating a prerential trade agreement with SACU. SA is essentially the King of SACU and this treaty would not be possible without SA.

Neither Indonesia, Mexico, Turkey, nor South Korea (other BRIC wannabes) represent an economic opportunity anything close to the combined SACU/EAC/COMESA markets. SA is easily the Kingpin of this proposed Free Trade Zone (Durban's port, alone, is responsible for most of the imports into this region). Other African rivals, such as Egypt and Nigeria, have a long way to go in terms of infrastructure, stability, and legitimacy of their financial / legal systems before they can be considered Africa's representative on a platform such as the G20 or BRIC.

Lastly, I am astounded you included Argentina as an example of a country more worthy of BRIC membership than SA. Argentina's population is smaller than SA's and even its GDP is lower than SA's (2010 IMF nominal GDP estimates: SA $354,414bn; Argentina 351,015bn). Even future IMF projections have SA's nominal GDP in 2015 at $455bn vs Argentina's at $410bn.

SA represents the gateway to this...

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26.01.2011
African growth steaming ahead, says IMF
By: JO-MARÉ DUDDY

STRONG domestic demand and resurgent exports will drive economic growth in Sub-Saharan Africa near to the high levels recorded before the global financial meltdown, the International Monetary Fund (IMF) said yesterday, pegging growth rates for the region at between five and 5,5 per cent for 2011.

Next year, growth could shoot up to 5,8 per cent, the IMF said in its latest Regional Economic Outlook, released yesterday.

The latest forecast for Namibia, released last October, predicts economic growth of 4,8 per cent for 2011. Economic outlooks released locally so far this year expect growth in 2011 to vary between 3,5 per cent and five per cent.

“The key explanation for the resilience of Sub-Saharan Africa has been the generally strong economic position of countries going into the global financial crisis. This allowed counter-cyclical fiscal and monetary policies to be put in place to soften the impact of the global downturn,” the IMF said.

It won’t all be plain sailing though, the Washington-based institution warned.
“The global crisis has left a legacy of elevated unemployment levels in countries with more developed manufacturing sectors and, more generally, of weakened fiscal balances,” the IMF said. Namibia’s official unemployment stands at 51,2 per cent.
According to the IMF, growth rates in most countries have returned close to potential and domestic demand is expected to remain strong on the basis of rising real incomes and sustained private and public investment.

“However, the trajectory of fiscal balances in some countries is not consistent with medium-term financial and debt sustainability. The Regional Economic Outlook suggests therefore that now is an opportune time in some cases to adjust medium-term spending and revenue plans and to start withdrawing any recent fiscal stimulus measures,” the IMF said.

Sub-Saharan Africa’s trading patterns have shown some dramatic shifts during the last few years toward China and other parts of developing Asia, the report said. These shifts were so marked that, by 2009, China’s share in the Sub-Saharan Africa’s total exports and imports exceeded that between China and most other regions in the world.

Exports of goods and services make relatively small contributions to aggregate demand in most sub-Saharan African countries. Europe and other advanced countries remain the region’s dominant trading partners, the IMF said. “However, in a minority of countries— including the major natural resource exporters— the impact of developing Asia on global export demand and commodity prices is expected to be significant in both the short and long term.”

Overall, trade with Asia is therefore likely to be an increasingly important factor in maintaining growth for the region on its current trajectory,” the IMF said. “But the key drivers of African growth are likely to remain: political stability; the business climate, including the prudent exploitation of natural resources; and the quality of economic management,” it added.

The IMF said Sub-Saharan Africa’s growth performance will hinge in part on official and private financing flows staying at their recent elevated levels. “If extended risk aversion or fiscal retrenchment in Europe was to lead to a sharp drop-off in donor support, this would almost certainly hamper the envisaged acceleration in GDP growth.”



http://www.namibian.com.na/news/marketplace/full-story/archive/2011/january/article/african-growth-steaming-ahead-says-imf/

As SA drives SACU/EAC/COMESA integration, SACU is going to become irrellevant. It's likely renegotation / possible eventual dissolution will devastate non-SA members, who benefit the most from the current SACU revenue allocation formula (i.e., SA subsidies).

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Monday, 31 January 2011
Issue: Vol.28 No.09
Friday, 21 January 2011

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Botswana's P8bn SACU nightmare

As the members of the Southern African Customs Union meet today to consider a new formula for the calculation of revenue sharing for the troubled customs union, Senior Research Fellow at the Botswana Institute of Development Policy Professor Roman Grynberg paints a gloomy picture for the future of the group.

It is a worrying image of a group of small economies namely Botswana, Lesotho, Swaziland held hostage by the dominating economic power of South Africa. Botswana is set to suffer irreparable damage if South Africa has its way and the new revenue calculation system is implemented. This country will lose as much as 2 per cent of its GDP. Other SADC countries watch with trepidation for the future of further regional economic integration hangs in the balance.

Mmegi publishes Grynberg's article, entitled SACU Revenue Sharing Formula and the Future of SADC. He writes in his personal capacity and his views are not necessarily those of BIDPA.

If you opened the Sothern African Development Community (SADC) home page last year it would tell you that by the end of 2010 there was supposed to be a customs union in place between the 15 SADC members. It no longer appears on the web site. A customs union is where the members, decide collectively on one common external tariff for goods coming from outside the area. All goods traded internally are supposed to be duty free. SADC is at present just a free trade area where all goods traded are duty free but there is no common external. Such a common external tariff as has existed for 100 years between the Southern African Customs Union (SACU) countries (i.e. South Africa, Botswana, Lesotho Namibia and Swaziland) which are also all members of SADC. Like so many things on the international agenda that people don't really want to do, the 2010 SADC customs union deadline was just allowed to slip. Several reasons are commonly given for why.

First, the SACU countries have a revenue sharing formula that Pretoria hates because it sees it as a massive burden on its treasury and until the SACU countries can figure out how to distribute their customs revenues they simply will not agree to extend the customs union membership to the rest of other 10 members of SADC. As one South African official put it, "As soon as you started to discuss the SADC customs union at a meeting the non-SACU members of SADC would say they want the SACU revenue sharing formula, something to which none of the SACU members will agree". As you simply cannot indefinitely have two separate revenue sharing in one customs union, until this SACU revenue sharing issue is resolved no SADC customs union is possible. But getting a new formula that will be agreeable to all SACU parties and does not discourage new members will be a hard ask as it will involve real sacrifice and pain.

The second reason why SADC is not proceeding is because southern African countries have watched the SACU integration process and increasingly they don't like what they see. South Africa has grabbed all the production benefits - virtually everything produced for the SACU market is made in South Africa and almost nothing is produced in the four other members. This is what economists call polarization- where one country in a common area gets all the benefits. As a result, while SADC members are increasingly signing all sorts of trade agreements to liberalize, the trade ministers are going home and in fact raising ever more non-tariff barriers to trade because they do not believe that liberalization will actually benefit anyone other than South Africa and hence they jealously hold on to what little industry they have at home. The third reason why the SADC integration is not deepening is that South African business no longer needs it and the South African government doesn't want it. South African ministers may make lovely speeches at both SACU and SADC meetings about their support for deepening integration but behind closed doors their officials say the exact opposite.

The nature of trade in southern Africa has changed profoundly since the end of apartheid and while South Africa once exported goods to all the SACU and most of the SADC countries, it now exports wholesale/retail firms which are owned or based in South Africa and are increasingly dominating all of the southern Africa retail trade.

Their trucks rumble across the Tlokweng border post every morning to Botswana loaded with South African goods bound for South African supermarkets and retail outlets located all over the country. This scene is repeated daily throughout SACU and SADC. The reasoning of South African officials and business is that these trucks will continue to cross the border whether there is a SADC or SACU customs union or not. All they need is free trade. South African officials don't want the SADC customs union either because they are now playing in the big league - they are now formally BRICS, working with the likes of Russia, India, China and Brazil and don't want their trade policy dictated by a collection of small developing and least developed countries which is what would happen under a SADC customs union. Not wanting trade policy dictated by the interests of someone else is certainly one thing all SACU and SADC members appear to have in common.

What is emerging in the region is a dangerous cocktail that is undermining Southern African integration with South Africa seeing itself as paymaster in SACU with no on-going commercial interests in further deepening integration with the rest of SACU or SADC. SADC countries, on the other hand, see themselves as victims of a self-interested hegemonic South Africa where all the benefits of a customs union have gone to Pretoria and SACU countries have had to pay much higher prices in order to protect South African made cars and clothes. The only thing South Africa really wants in terms of regional trade policy and strongly supports is the free trade agreement between SADC, the East African Community and COMESA. This idea is a modern metamorphosis of a very 19th century vision which would allow the trucks to keep flowing across the Limpopo with Pick n Pay and Woolworths selling South African goods from the Cape to Cairo. Sounds familiar? Cecil Rhodes would have felt right at home in this vision of Africa!

On Friday 21st SACU officials will meet to consider the very first issue blocking further SADC integration which is the SACU revenue sharing formula. They are considering a report which, if implemented would have the most far reaching implications for SACU customs union and may well result in its demise.

The draft report proposes a huge increase in customs and excise revenue for South Africa, upwards of 12 billion rand per year, at the expense of Botswana, Namibia and Swaziland. Under the proposals Botswana would be the greatest loser paying 2/3 or eventually 8 billion rand of South Africa's 12 billion rand increase in revenue. By a clever sleight of hand Lesotho, the poorest SACU member, will be slightly better off thereby dividing it from its traditional allies in SACU.

The SACU secretariat consultants proposed formula would see revenue decline by a maximum of 2 percent of GDP per year in Botswana, Namibia and Swaziland for a period of eight years. This according to the SACU report the decreases in government revenue would be seen as 'incremental' and not a decrease in revenue of catastrophic proportions. Nothing could be further from the truth. Swaziland, with over 60 percent of government revenues coming from SACU transfers is of questionable economic viability without these funds. The implications for Namibia and Botswana would also be very serious indeed. For Botswana, the most prosperous and stable SACU country, a 2 percent of GDP annual decline in government revenue for eight years from 2012-2020 followed by what will almost certainly be an even more substantial decline in diamond mining revenue as the huge Jwaneng diamond mine starts to wind down (see National Development Plan 10) will have dire long term consequences for the country. The current SACU proposals will only serve to further increase the perception of inequity in SACU where South Africa, which will get a further 12 billion rand in revenue, and is seen to have gained all the production benefits from SACU which stem in no small part from the billions in subsidies it has offered industry to locate there. Late last year the South African Trade Minister announced a further 13 billion rand in subsidies for firms locating in South Africa. These are subsidies that no small SACU country like Botswana can possibly hope to compete with.

The current SACU proposals will not solve the basic problem of bringing more members into SACU or creating a SADC customs union but, if accepted , will create long term economic instability in all of South Africa's near neighbors and may well turn Swaziland, the most vulnerable of all the SACU members into a failed state. The proposals will almost certainly be rejected and should be rejected by the South African political leaders if they are actually concerned about the stability of the region than its revenue flows.

*Grynberg, Senior Research Fellow at the BIDPA and the views expressed are his own and not necessarily that of BIDPA.


http://www.mmegi.bw/index.php?sid=6&aid=385&dir=2011/January/Friday21

Actually, this was not a "political" decision. If it was, then countries that piss the West off (like Venezuela, Cuba, etc) would have been invited to the club, as none of the current BRIC countries (who see themselves as representing a counter-force to the West) have historically strong relations with the West (with the exception, to a small extent, of India and Brazil). Instead, this was a clever strategic decision for economic reasons on the part of the original BRIC members.

I'm not sure if you are aware of SA's dominance re: trade in the Sub-Saharan context, particularly the Southern and East African regions. If you read some of the posts above, you will see that the countries of Southern, East, and Central Africa are in the process of creating a massive free trade zone. This combined market exceed the populations of Russia and Brazil, and will rival India's and China's in the future. Africa is experiencing phenomenal growth rates and is seen as the "next Asia" (i.e., it represents a large, untapped market). SA easily represents the gateway to these markets by any economic measure (it's the largest investor on the African continent, after China) and BRIC countries know this. As an example of SA's strategic importance for BRIC countries, India is currently negotiating a prerential trade agreement with SACU. SA is essentially the King of SACU and this treaty would not be possible without SA.

Neither Indonesia, Mexico, Turkey, nor South Korea (other BRIC wannabes) represent an economic opportunity anything close to the combined SACU/EAC/COMESA markets. SA is easily the Kingpin of this proposed Free Trade Zone (Durban's port, alone, is responsible for most of the imports into this region). Other African rivals, such as Egypt and Nigeria, have a long way to go in terms of infrastructure, stability, and legitimacy of their financial / legal systems before they can be considered Africa's representative on a platform such as the G20 or BRIC.

Lastly, I am astounded you included Argentina as an example of a country more worthy of BRIC membership than SA. Argentina's population is smaller than SA's and even its GDP is lower than SA's (2010 IMF nominal GDP estimates: SA $354,414bn; Argentina 351,015bn). Even future IMF projections have SA's nominal GDP in 2015 at $455bn vs Argentina's at $410bn.

No, because BRIC isn't an Anti Western group, I don't know where you get that from. China invited South Africa as a way to give it some political clout and in exchange preferential treatment with future deals. Or just political in the sense of giving African representation.

All those countries have stronger performing economies and larger markets. Mexico is part of NAFTA the second largest free trade union in the world. With a much larger, wealthier consumer base than anywhere apart from the European Union. Argentina has Mercosul which includes Brazil and once again a much larger market. Indonesia has a population of 220 million people and a GDP larger than SADC. Africa is seen great growth but South Africa isn't and you can't include a country into a group like BRIC just because it's in a booming region. Theirs a reason why O'Neil strongly disagreed with SA's inclusion.

Argentina's economy has been booming in the last 7 years with growth rates above 7% consistently and their more developed, it's benefiting greatly from Brazilian as well as Chinese demand. It surpassed South Africa last year in terms of car manufacturing and it's agriculture as well industrial sector is growing vigorously. It's main problem is inflation which is above 20%. IMF has always downgraded Argentine growth the IMF has them this year to grow 7.5% but most expect it to hit past 8% above Brazil http://online.wsj.com/article/BT-CO-20110120-713922.html. Next year it will hover around 5%, so my guess is they surpass South Africa in GDP last year. Check up with me in a month or two to verify that.

Go back and re-read my post. I didn't say that BRIC is anti-west. I said it regards itself as a counter to the (geopolitical influence of the) West (led by the US). Big difference. There's been a lot written about this. For example: http://www.just-international.org/index.php?option=com_content&view=article&id=4095:-bric-becomes-brics-changes-on-the-geopolitical-chessboard&catid=45:recent-articles&Itemid=123

Re: Argentina's economy - thanks for the offer but no need to check back with you in a month. I'm generally on top of these matters. Besides, my earlier point re: BRIC-wannabe countries applies equally (in fact, moreso) to Argentina given its relatively small size. It is a gateway to itself, not regional markets.

Anyway, while this banter about SA's suitability for BRIC membership is interesting, it's irrelevant. SA is now a member of BRICS and whether armchair critics disapprove is not going to change anything. The original BRIC countries made this decision at the highest level and they actually don't care what armchair critics (and 'experts') think. If they did, they would have listened to Jim O' Neil.

An editorial in last week's Sunday Business Report by the Statistician-General of SA detailed the demanding statistical report planning that BRICS members have to undertake in preparation for the BRICS summit in April. It made for very interesting reading. SA has never undertaken a report like this (14 chapters on a range of indices, which will be matched category-by-category by other BRICS countries to enable them to discuss relative strengths, weaknesses, boosting trade, etc). This alone is a very positive spin-off for SA.

Go back and re-read my post. I didn't say that BRIC is anti-west. I said it regards itself as a counter to the (geopolitical influence of the) West (led by the US). Big difference. There's been a lot written about this. For example: http://www.just-international.org/index.php?option=com_content&view=article&id=4095:-bric-becomes-brics-changes-on-the-geopolitical-chessboard&catid=45:recent-articles&Itemid=123

Re: Argentina's economy - thanks for the offer but no need to check back with you in a month. I'm generally on top of these matters. Besides, my earlier point re: BRIC-wannabe countries applies equally (in fact, moreso) to Argentina given its relatively small size. It is a gateway to itself, not regional markets.

Anyway, while this banter about SA's suitability for BRIC membership is interesting, it's irrelevant. SA is now a member of BRICS and whether armchair critics disapprove is not going to change anything. The original BRIC countries made this decision at the highest level and they actually don't care what armchair critics (and 'experts') think. If they did, they would have listened to Jim O' Neil.

An editorial in last week's Sunday Business Report by the Statistician-General of SA detailed the demanding statistical report planning that BRICS members have to undertake in preparation for the BRICS summit in April. It made for very interesting reading. SA has never undertaken a report like this (14 chapters on a range of indices, which will be matched category-by-category by other BRICS countries to enable them to discuss relative strengths, weaknesses, boosting trade, etc). This alone is a very positive spin-off for SA.

Okay, but being counter to the U.S doesn't equate me saying that choosing a country entrance for political reasons entail allowing Venezuela or Iran to join the club.

The regional markets you talk about are largely poor and underdeveloped. Can't be compared to the likes Mexico provides or Indonesia. Also I find it an incredibly weak argument that the main reason for South Africa's invitation is that it provides a gateway to a region and not it's own market. The DRC, Zambia, Zimbabwe, Botswana, Namibia are not that important in a global context.

No, you should distinguish the political union that was established a few years ago and the marketing acronym by Jim O'Neil for investors. According to him and many critics South Africa doesn't warrant entry and he's said so explicitly. The next country according to him that he'll include is Mexico, a country whose GDP alone is higher than all of SADC by a considerable margin.

It's a waste of my time trying to convince you, and vice versa, so let's just agree to disagree on this issue. BRICS is a reality so you and the rest of the world will just have to live with it, regardless of how you feel about the matter (the anti-SA comments BRICS membership has yielded reminds me of the international reaction when SA was awarded the 2010 FIFA World Cup ("SA doesn't deserve it" etc).

Since you seem to be on top of things, come back to this issue in 40 years and let's see if Africa is the same continent it is now (largely poor and undeveloped). That's how China and India were 40 years ago and look at them today. On a balance of probabilty, Africa is only going to go up in the decades ahead, and countries and multinationals who are ignorant of Africa's potential do so at their peril / opportunity cost. As the saying goes, 'the early bird catches the worm'. On that note, ironically, every African country you listed is rich in commodities, and in many cases, largely untapped (especially the DRC). SA companies have realised this and many have won significant prospecting rights, and are already yielding roaring profits (never mind consumer-driven retail profits that SA companies have yielded from those "poor" markets). However, since SACU/COMESA/EAC countries "are not that important in a global context", perhaps every single economist of note who has forecasted bright futures for these markets, is wrong, and India is foolish to negotiate a preferential trade agreement with SACU countries (whose members comprise Namibia, Botswana, Swaziland, Lesotho, and SA; see: http://www.business-standard.com/india/news/india-sacu-to-sign-preferential-trade-agreement-sharma/122004/on). By your reasoning, India should have realised that all these countries, bar (or, as per your argument, including) SA, are insigificant, represent no opportunities, and that it would have been better to conclude a bilateral agreement with just SA. I think you should enlighten the Indian government on their folly. Oh, and while you're at it, perhaps you should enlighten the silly Chinese government too. They have been negotiating a China-SACU FTA too these past few years. Oh, and you may want to throw in Brazil too. It has been driving a SACU-MERCOSUR FTA for the past few years too. Seems all these BRIC members are clueless re: SACU relevance and potential. However, I am sure they will yield to your greater wisdom, especially that SA does not represent a gateway to these and other sub-Saharan markets.

Lastly, again, nice banter, but your views are actually irrelevant in the grand scheme of things since BRICS is now a REALITY, not possibility, or perception. Since you obviously know more than the current BRIC country leaders and their advisors re: BRIC membership suitability, I trust you will dedicate some of your time to educating and correcting current BRIC members re: their poor judgement in admiting SA to their exclusive 'club'. Nevermind that their strategists know infinitely more than us and that it's actually those countries' perogative who they invite to their club/association. However, I recommend you try since you feel so strongly about the matter.

If it's any consolation to you and other critics of new enlarged BRICS, maybe BRICS will one day kick SA out and/or enlargen to include other BRICS-wannabe members such as Mexico, Indonesia, South Korea, and Mexico (all of whom have aggressively lobbied to be admitted to the group). In my personal opinion, they are also major emerging markets and it would be good to have some or all of them part of a enlarged consultative group/association, although the larger the group, the less exclusive and more generic / less relevant it will become.

Ja, seriously Alex Roney, you come across as just obstinately annoyed and jealous that SA is part of the BRICS, countering any logical reason for our inclusion with 'this country 'deserves it more'...

Just leave it, I am sure another topic will come up soon when you can have another go at South Africa.

For now, BRICS is BRICS and South Africa is moving forward.

Ja, seriously Alex Roney, you come across as just obstinately annoyed and jealous that SA is part of the BRICS, countering any logical reason for our inclusion with 'this country 'deserves it more'...

Just leave it, I am sure another topic will come up soon when you can have another go at South Africa.

For now, BRICS is BRICS and South Africa is moving forward.

I wasn't even going to bother posting again until you directed that post at me. So maybe you should leave it. lol

Well yes I do and people can't really counter the rational argument that a country like Indonesia, Turkey, Mexico and maybe even Argentina have much stronger case to be part of the BRIC. If your going to include South Africa than you might as well lower the bar considerably and let any good size developing country in because the difference in GDP between South Africa and India (BRIC's smallest economy) is more than 4 times the size, a gap that will only increase. So far the only argument I've seen is that South Africa is a gateway to the continent or SADC however not much is said about the actual prospects/potential of South Africa itself and that partly reflects South Africa's sluggish economic performance in the last couple of years along with the great need for structural reform.

So while this is great PR, something that Zuma is already soaking in the glory it doesn't really change reality on the ground.

Oh good grief - there are plenty of arguments why SA IS NOW PART OF BRICS - read Romans posts for a start...or don't...we know your opinion, and that is all it is.
BRICS is a fact, you can whine as much as you want, and SA will benefit from it, which seems to annoy you even more...why I dont know, it is only going to be good for Africa as a whole.

I wasn't even going to bother posting again until you directed that post at me. So maybe you should leave it. lol

Well yes I do and people can't really counter the rational argument that a country like Indonesia, Turkey, Mexico and maybe even Argentina have much stronger case to be part of the BRIC. If your going to include South Africa than you might as well lower the bar considerably and let any good size developing country in because the difference in GDP between South Africa and India (BRIC's smallest economy) is more than 4 times the size, a gap that will only increase. So far the only argument I've seen is that South Africa is a gateway to the continent or SADC however not much is said about the actual prospects/potential of South Africa itself and that partly reflects South Africa's sluggish economic performance in the last couple of years along with the great need for structural reform.

So while this is great PR, something that Zuma is already soaking in the glory it doesn't really change reality on the ground.


Oh good gracious...did you even bother to read...:bash:

It's a waste of my time trying to convince you, and vice versa, so let's just agree to disagree on this issue. BRICS is a reality so you and the rest of the world will just have to live with it, regardless of how you feel about the matter (the anti-SA comments BRICS membership has yielded reminds me of the international reaction when SA was awarded the 2010 FIFA World Cup ("SA doesn't deserve it" etc).

Since you seem to be on top of things, come back to this issue in 40 years and let's see if Africa is the same continent it is now (largely poor and undeveloped). That's how China and India were 40 years ago and look at them today. On a balance of probabilty, Africa is only going to go up in the decades ahead, and countries and multinationals who are ignorant of Africa's potential do so at their peril / opportunity cost. As the saying goes, 'the early bird catches the worm'. On that note, ironically, every African country you listed is rich in commodities, and in many cases, largely untapped (especially the DRC). SA companies have realised this and many have won significant prospecting rights, and are already yielding roaring profits (never mind consumer-driven retail profits that SA companies have yielded from those "poor" markets). However, since SACU/COMESA/EAC countries "are not that important in a global context", perhaps every single economist of note who has forecasted bright futures for these markets, is wrong, and India is foolish to negotiate a preferential trade agreement with SACU countries (whose members comprise Namibia, Botswana, Swaziland, Lesotho, and SA; see: http://www.business-standard.com/india/news/india-sacu-to-sign-preferential-trade-agreement-sharma/122004/on (http://www.business-standard.com/india/news/india-sacu-to-sign-preferential-trade-agreement-sharma/122004/on)). By your reasoning, India should have realised that all these countries, bar (or, as per your argument, including) SA, are insigificant, represent no opportunities, and that it would have been better to conclude a bilateral agreement with just SA. I think you should enlighten the Indian government on their folly. Oh, and while you're at it, perhaps you should enlighten the silly Chinese government too. They have been negotiating a China-SACU FTA too these past few years. Oh, and you may want to throw in Brazil too. It has been driving a SACU-MERCOSUR FTA for the past few years too. Seems all these BRIC members are clueless re: SACU relevance and potential. However, I am sure they will yield to your greater wisdom, especially that SA does not represent a gateway to these and other sub-Saharan markets.

Lastly, again, nice banter, but your views are actually irrelevant in the grand scheme of things since BRICS is now a REALITY, not possibility, or perception. Since you obviously know more than the current BRIC country leaders and their advisors re: BRIC membership suitability, I trust you will dedicate some of your time to educating and correcting current BRIC members re: their poor judgement in admiting SA to their exclusive 'club'. Nevermind that their strategists know infinitely more than us and that it's actually those countries' perogative who they invite to their club/association. However, I recommend you try since you feel so strongly about the matter.

If it's any consolation to you and other critics of new enlarged BRICS, maybe BRICS will one day kick SA out and/or enlargen to include other BRICS-wannabe members such as Mexico, Indonesia, South Korea, and Mexico (all of whom have aggressively lobbied to be admitted to the group). In my personal opinion, they are also major emerging markets and it would be good to have some or all of them part of a enlarged consultative group/association, although the larger the group, the less exclusive and more generic / less relevant it will become.

gotta love rand at 7:28, was at 6:68 only 5 weeks ago

A new opinion piece by Jim O' Neil. He conveniently omits any reference to the new enlarged BRICS and SA...

--------------

February 11, 2011

Down with “Emerging Markets”
by Jim O’Neill

It has been nine years since I coined the acronym “BRIC”, which has become synonymous with the rise of Brazil, Russia, India, and China. It has been more than seven years since my colleagues at Goldman Sachs and I first published an outlook to 2050 in which we suggested that the four BRIC economies could emerge bigger than the G-7 economies, and, together with the United States, would constitute the world’s five largest.

It also has been more than five years since the expression “Next Eleven”, or “N-11”, first appeared. That term bracketed the next eleven largest countries by population, and sought to determine their BRIC-like potential.

These 15 countries drive most of the positive momentum behind the world economy nowadays. China has overtaken Japan as the world’s second largest economy, with output roughly equal to that of the other three BRIC countries combined. Their aggregate GDP stands at around $11 trillion, or about 80 per cent of the US level.

Domestic demand in the BRIC countries is even more impressive. The collective dollar value of BRIC consumers is estimated conservatively at just over $4 trillion, possibly $4.5 trillion. The US consumer market is worth more than double that – around $10.5 trillion – but BRIC consumer power is currently growing at an annual rate in dollar terms of around 15 per cent, which means an annual rate of roughly $600bn.

If this pace is maintained, BRIC consumers will be adding another $1 trillion to the global economy by the middle of this decade. By the end of the decade, they will be worth more than US consumers.

Indeed, at some point during this decade, the BRIC economies combined will become as big as the US economy, with China’s GDP alone reaching about two-thirds that of the US. The four countries will be responsible for at least one-half of real GDP growth in the world, and possibly as much as 70 per cent.

Beyond the BRICs, among the likely top 10 contributors to global GDP growth this decade are South Korea, Mexico, and Turkey. From the so-called developed world, only the US is guaranteed a place on this list – and the top 20 could include Iran, Nigeria, the Philippines, and Vietnam.

So how should we now think about the term “emerging markets”?

A few weeks ago, I decided with my colleagues to pursue the term “growth economies”, which Goldman Sachs adopted in 2010 to describe how we treat many of the world’s most dynamic markets. At its simplest, a growth economy should be regarded as one that is likely to experience rising productivity, which, together with favourable demographics, points to economic growth that outpaces the global average.

But an economy also needs sufficient size and depth in order to allow investors not only to invest, but also to exit when appropriate. So we opted for the following: any economy outside the so-called developed world that accounts for at least one per cent of current global GDP should be defined as a growth economy.

At this size, currently around $600bn, an economy should be large enough to allow investors and businesses to operate as they do in advanced countries, yet also be likely to grow faster. All other economies should continue to be defined as emerging markets. According to this definition, eight countries currently qualify: the BRIC countries, along with South Korea, Indonesia, Mexico, and Turkey, while others – including Saudi Arabia, Iran, Nigeria, and the Philippines – could join the list in the next 20 years.

It is also time that investors started to benchmark their portfolios more appropriately. In the past few decades, it has become conventional for equity investors to base their decisions on neutral benchmarks determined by the market capitalisation of companies and indices. But this gives much more weight to the US economy and its companies relative to so-called emerging markets.

An alternative approach is to use a GDP-weighted benchmark. For bold and aggressive investors, a benchmark that incorporates future predicted GDP gives a lot more weight to emerging markets, especially to the growth economies.

The index that Goldman Sachs calculates every year for around 180 countries, called a Growth Environment Score (GES), is used to monitor productivity and the likelihood of sustainable growth. The index goes from 0 to 10, with 13 sub-indices for overall growth and productivity. Currently, for example, Korea’s GES is 7.5, compared to 6.9 for the US.

Economies that remain small and have low GES scores are appropriately treated as emerging markets with lots of risk. While they may grow significantly and escape from their current situation, they are vulnerable to adverse developments in core developed countries – especially the US – and in these countries’ financial markets.

Countries with low GES scores need to undertake policies that allow them to rise. For example, we forecast that within the next 20 years Nigeria, home to around 20 per cent of Africa’s population, could account for one per cent of global GDP. But its current GES score of 3.9 is significantly below the BRIC and N-11 average. On the other hand, Nigeria’s economy has almost doubled in size over the last 13 years. If it maintains this progress, before 2030 it will no longer be an “emerging economy”.

That would be an exciting development for Nigeria – and for Africa. Even more exciting is the likelihood that Nigeria will not be alone at its graduation into a growth economy.



Mr O’Neill is chairman of Goldman Sachs Asset Management and a member of the board of the Bruegel think tank.

http://www.maltabusinessweekly.com.mt/news.asp?newsitemid=10583

Nowhere in his self-absorbed little diatribe does he even MENTION South Africa! Given that BRICS is now a reality (as opposed to his view of how the world should be), is that not a little strange?

Does this guy have some beef with South Africa? I mean, we know his nose is out of joint because we are part of the BRICS, but its almost like there is more to it...

Yeah, he seems to have some vendetta against South Africa.

I mean, not only does he not mention SA in BRIC, but neither in the Next Eleven, or even in his "Next" Next Eleven grouping...he includes Egypt, Nigeria and several other African countries in his groups without even a peap about powerhouse SA anywhere in the rankings.

Methinks he has some serious hatred against us for some reason.:ohno:

Yes he's got beef with SA because over the past decade SA equity markets has outperformed the BRIC markets especially China (by 10%) annually. He just mad he did not see that SA equities mkt was going to be one of the world's best performing assets...

He just totally discredits himself by listing Egypt and Nigeria and not even mentioning South Africa - you thought he might be a little more clever than that, but he obviously is not.

I look forward to more 'opinion pieces' from him as the BRICS boom...

It's interesting that he keeps mentioning Egypt and Nigeria but conveniently omits to mention that with their current high, and projected even higher, populations in the future, they need growth rates exceeding 9% just to keep up with with new job-seekers entering the market annually.

While Egypt has been humming along at 5-7% growth pa, and this seems impressive compared to developed countries, it actually needs more than 9% growth just to break even and keep current high unemployment levels in check. With a very young population, millions are joining the job market every year and are not finding work. On that note, while Egyptian authorities have portrayed the official unemployment rate at less than 10%, experts says the real figure is likely closer to 20-25%. Frustration at the sustained poverty and the country's high unemployment rate contributed to the protests over the last few weeks.

Nigeria is in a similar position. It needs massive growth, in excess of 10%, to stave off growing mass unemployment. Nigeria's problem is that the country relies primarily on oil for growth. With the world increasingly turning towards green technologies and weaning its dependence on oil, I don't see a bright future for Nigeria in the next 20-30 years, unless it urgently begins diversifying its economy.

O'Neil focuses on massive populations (and thus, by extension, consumer markets) but it's useless having massive populations when most of the people are unemployed and unable to optimally contribute to the economy. And that's the problem with O'Neil. His thesis rests on massive consumer markets but he doesn't pay any attention to important factors like how that market will sustain itself, and the standard of life they will have if authorities don't address important shortcomings, such as reaching high growth rates just to absorb new young entrants to the job market and political risks etc. In fact, O'Neil has been remarkably quite on recent upheavals in Egypt and Nigeria (where serious and deadly religious conflicts are emerging and people like Gadaffi have already called for the country to be split in two, along religious lines {Muslim north and Christian south}).

Big populations may sometimes translate to big potential consumer markets, but also equate to strained resources, and usually a poorer quality life overall. I'd rather live in a medium population country that is sustainable and can address its problems over time, than a massive one which is unsustainable and unable to keep on top of its backlogs, and growing challenges.

^^ I'm also quite perplexed by this whole hype for massive populations and how it automatically equates to large economies.

Australia only has 20-something million ppl and it has a Trillion Dollar economy (incidentally it's economy is almost as large as the whole African economy). SA has the potential to be another Australia, however I suspect we will be the resource suppliers to India rather than China as Australia has that mkt cornered.

The latest revolutions happening in the Arab countries are really opening my eyes to the true situations in these countries. In SA we have a free media hence the country is always out there warts and all, I thought Tunisia was the most advanced country in Africa and yet it's citizens are refugees in Europe, that is not happeining in SA, yes there is emmigration but there are no refugees (unless you count the lunatic fringe ala Hurtley)
In terms of GDP (in nominal dollar terms) the gap between SA and Egypt is actually still growing and the SA economy is not yet firing on all cylinders. Good luck to Egypt though, thyey're gonna need it...

Agreed. Well, with the crash of the Egyptian pound following the recent upheavals there (and possibly greater weakening in the medium term), and the relative strengthening of the rand over the last year, the GDP nominal gap between SA and Egypt will grow in the short term.

That is true about warts and all, wrt South Africa. Here, we actually report our crime and HIV statistics and the nasty stuff, and we are trying to do something about it.

What the haters dont mention when they refer to these statistics, is that half the worlds countries dont even report their data, or dont have the ability to do so.

We are unique in being a developing nation with a lot of first world structures, free press, liberal constitution etc so this stuff gets out there.
It may not be nice, but at least we have the organisation to record these stats and try and improve them.

^^Agree...

That is true about warts and all, wrt South Africa. Here, we actually report our crime and HIV statistics and the nasty stuff, and we are trying to do something about it.

What the haters dont mention when they refer to these statistics, is that half the worlds countries dont even report their data, or dont have the ability to do so.

We are unique in being a developing nation with a lot of first world structures, free press, liberal constitution etc so this stuff gets out there.
It may not be nice, but at least we have the organisation to record these stats and try and improve them.

+1

BRICS already has an effect on SA's thinking...______________________________________________

Govt to reform labour law, BEE
Feb 15 2011 22:12

Cape Town - Government will reform labour policies and revisit broad-based black economic empowerment as part of its new push for job creation.

This emerged during an address by Economic Development Minister Ebrahim Patel in Parliament on Tuesday.

Patel said the state will change labour policies to support productivity and improve protection for vulnerable workers. Broad-based black economic empowerment will also be re-examined.

He stressed that job creation will be a priority throughout all spheres of government this year.

Addressing the national council of provinces select committee on the New Growth Path, he said the challenge of job creation would override all departments.

"All government departments will align their programmes with the job creation imperative. The provincial and local spheres have been requested to do the same... with regular reporting on what they are doing to support employment creation and growth," said Patel.

With the percentage of people employed in South Africa currently at 41.3% and lower than in countries like Egypt, India, Malaysia, Brazil and China, Patel said the government's new jobs plan was vital.

He said some of the key job drivers were infrastructure, agriculture, mining and beneficiation, manufacturing and tourism, rural development and new economies like the green economy.

He said the government would step up education and skills development, enterprise development, developmental trade policies with a strong orientation to new growth centres and investment to support African development.

Training would be at the centre of the new growth path. Resources and funding would be drawn from state budgets, universities and science councils, retirement funds, the domestic private sector, international investment, donor funding and financial institutions.

"Each sector must contribute to building the economy," said Patel.

That is true about warts and all, wrt South Africa. Here, we actually report our crime and HIV statistics and the nasty stuff, and we are trying to do something about it.

What the haters dont mention when they refer to these statistics, is that half the worlds countries dont even report their data, or dont have the ability to do so.

We are unique in being a developing nation with a lot of first world structures, free press, liberal constitution etc so this stuff gets out there.
It may not be nice, but at least we have the organisation to record these stats and try and improve them.+1
Good choice for BRIC with all this potential you mentioned with the structures. Well done SA for getting in btw, well it depends whether you guys or happy or not. I guess most of you are from what I read. ;)

It is certainly a good thing, but we wouldn't be going on about it so much if it wasn't for this tirade of anti-SA stuff and seeming outrage that SA got invited to the BRICS.
Its just a bit wierd, actually.
I mean, people from Nigeria or Indonesia and Egypt actually seem personally afronted that they weren't invited, or that they 'deserve' it more!

But, before this happened, they weren't even really interested in BRIC - whereas South Africa already had strong ties with India and Brazil in particular - we do annual joint naval exercises with Brazil, we are part of the group called IBSA (India Brazil SA).

So it was already halfway there, and then China invited us to join...so I really dont see where all this negativity and disputing of our right to be in BRICS comes from...

^^That's cos they're slouches, they never bid for ish and then they cry when we go all out to get it They think things should fall in their laps, another thing is that a lot of countries really underestimate us. Watch as win the SKA bid over Australia, this is my dream and wish, the Aussies must not slack or underestimate us. That would be bigger than BRICS. Keep up the fight...

Watch as win the SKA bid over Australia, this is my dream and wish, the Aussies must not slack or underestimate us. That would be bigger than BRICS. Keep up the fight...

I'm even crossing my toes for this one. We laready developed MeerKAT and I hope it will add more points to our bid.

Pule the SKA will be a turning point in SA becoming a tech powerhoouse, apparently we're already making major breakthroughs in the the fields of radio receivers and the IT that's required to crunch all the data. The breakthroughs are directly applicable in making next-generation radios for faster wireless and such. I think we might need to involve the ancestors in this one. Remember how we consulted the ancestors just before the world cup and we went on to host the best world cup ever hosted? I can donate a bull for the ceremony...

Re: BRICS. It's a done deal.

I haven't had time to peruse any government BRICS documents but its clear that some forumers are missing the bigger picture. One can endlessly debate about whether our inclusion is warranted, but if you're looking to the future, one has to ask, can we afford NOT to be a part of BRICS?

^^That's cos they're slouches, they never bid for ish and then they cry when we go all out to get it They think things should fall in their laps, another thing is that a lot of countries really underestimate us. Watch as win the SKA bid over Australia, this is my dream and wish, the Aussies must not slack or underestimate us. That would be bigger than BRICS. Keep up the fight...

WRT to SKA it would be amazing to win it outright but I've heard reports that it might be "shared" between SA and Australia... If this happens at least there's no chance of us losing outright!

SKA bid gains momentum with scientific breakthroughs – DST
COMMENT PRINT EMAIL |

By: Petronel Smit
18th February 2011

Updated 9 minutes agoTEXT SIZE Africa’s bid to build and host the Square Kilometer Array (SKA) telescope is gaining momentum with significant scientific breakthroughs, the Department of Science and Technology (DST) said on Friday.

The DST reported that South Africa had, for the first time, completed the experiment of the “detection of fringes” in a joint very long baseline interferometry (VLBI) observation, without assistance from other countries.

The 26 m Hartebeesthoek Radio Astronomy Observatory (HartRAO), near Pretoria, teamed up with one of the seven 12 m dishes currently part of the Karoo Array Telescope (KAT-7), over 900 km away, to jointly observe and record data from a distant radio source known as 3C273.

The data was then correlated in Cape Town to produce the first-ever African fringe detection, at its first attempt.

South Africa SKA project director Dr Bernie Fanaroff said that the VLBI was significant as it is used for imaging distant cosmic radio sources, spacecraft tracking, and for applications in astrometry.

“However, it can also be used in reverse to perform earth rotation studies, map movements of tectonic plates within millimetres, and other types of geodesy,” he noted.

Further to the fringe detection breakthrough, South African engineers have also built the building block for the next generation of digital processing systems.

Fanaroff explained that the reconfigurable open architecture computing hardware (ROACH) board was primarily a South African development and already in use in 300 high-technology facilities globally. However, ROACH-2 prototypes were much faster and more powerful.

“To put such computing speed and capacity in astronomy in perspective, the SKA is expected to collect more data in one week than humankind has collected in its entire history,” he added.

The leap forward in technology largely resulted from advances in field-programmable gate array (FPGA) technology. Progress in FPGA was set to hold for another four generations, which made future iterations of ROACH likely in the next few years.

Fanaroff pointed out that this was all essential preparation for the SKA project.

“SKA will revolutionise science. It will be the world’s largest radio telescope and probably capable of answering questions that we haven’t even though to ask yet,” he noted.

Expected scientific discoveries range from understanding the cosmic web of neutral gas, which would unravel how the first stars and black holes were formed. It would track galaxies to investigate the rate of expansion of the universe and possibly identify the nature of dark energy.

It would also produce three-dimensional galactic maps and detect extremely weak extra-terrestrial signals and pinpoint planets capable of supporting life.

Fanaroff added that the SKA would allow for the study of gravity, which could possibly lead to the theory of relativity being challenged. Pulsars, the collapsed spinning cores of dead stars, would also be monitored, providing information on gravitational waves and black holes.

“In 2011, South Africa, in conjunction with its eight African-partner countries bidding communally for the SKA, will pull out all the stops to show the world that Africa is the future as far as science and technology are concerned,” he said.

South Africa and Australia are the two countries shortlisted to host the SKA – a decision is expected to be made next year. The SKA will be fully operational by 2024.

^^Made my day!! Woohoo... GO meerKat, Go meerKat!!

Pule the SKA will be a turning point in SA becoming a tech powerhoouse, apparently we're already making major breakthroughs in the the fields of radio receivers and the IT that's required to crunch all the data. The breakthroughs are directly applicable in making next-generation radios for faster wireless and such. I think we might need to involve the ancestors in this one. Remember how we consulted the ancestors just before the world cup and we went on to host the best world cup ever hosted? I can donate a bull for the ceremony...


We definately need ancestors Nostra :)


Another breakthrough :banana:, http://www.engineeringnews.co.za/article/sas-ska-bid-gains-momentum-with-scientific-breakthroughs-dst-2011-02-18

Good to see SA topping the other BRICS at something...

-------

SA has most transparent budget process
February 22 2011 at 06:04am
By Ethel Hazelhurst

South Africa comes top in at least one global ranking. According to Kevin Lings, the economist at Stanlib, a survey of 94 countries which takes place once every two years has ranked the country’s national budgeting process first in terms of transparency and accountability.

The countries included the UK, US, Sweden, Norway, Germany and the Bric countries – Brazil, Russia, India and China.

South Africa’s ranking is in contrast to its performance on the World Economic Forum’s global competitiveness index, where it was placed 54th out of 139 economies in the 2010/11 survey; and the World Bank’s ease of doing business survey benchmarked to June last year, which placed it 34th out of 183.

“The international open budget survey is the world’s only independent and comparative measure of budget transparency,” Lings said.

The criteria used have been developed by the International Monetary Fund, the Organisation for Economic Co-operation and Development and the International Organisation of Supreme Audit Institutions.

“The average open budget index score for the countries surveyed last year is 42 out of 100. South Africa received a score of 92,” Lings said.

An open budgeting process provides citizens with enough information to understand their national budgets and, according to the report, only 20 of the 94 governments achieved this objective, scoring above 60. About a third of the countries provided some information but less than required. And 41 countries provided “acutely inadequate” information.

Lings said South Africa’s budget process “has improved dramatically over the years, especially after Trevor Manuel became finance minister”. Manuel became finance minister in 1996.

His successor, Pravin Gordhan, had improved the process further, said Lings.

“The documentation has become consistent, transparent and rich in detail, something that was completely lacking prior to 1994,” Lings said.

But he pointed out: “Unfortunately a transparent budgeting process is a necessary but not sufficient condition for effective government.

“Once National Treasury has allocated the funds and set the key expenditure priorities, it is up to each department to deliver an acceptable outcome using the funds available. That is clearly not happening, especially in key areas such as education and health care, but also within many provinces and municipalities.” - Business Report


http://www.iol.co.za/business/business-news/sa-has-most-transparent-budget-process-1.1030065

Positive views of South Africa on the rise
Wednesday, 09 March 2011


Positive international views of South Africa have improved sharply over the last year, according to the annual BBC World Service Country Rating Poll of 16 major countries around the world.

Thanks in part to the successful hosting of the 2010 Fifa World Cup, as well as the country's new membership of the "Brics" group of fast-growing emerging economies, the proportion of poll respondents positively rating South Africa's influence in the world rose from 35% to 42%.

This was the second-biggest rise among the countries surveyed, after Brazil's jump in positive international perceptions from 40% to 49%, lifting South Africa into ninth place in the overall order of popularity.

Of the 27 countries surveyed, 17 have positive views of South Africa, two have "lean negative" views, while eight are divided.
Germany was again the most positively viewed nation, with 62% of respondents rating its influence as positive (an increase of three points).

In response to the question, "Please tell me if you think each of the following countries is having a mainly positive or mainly negative influence in the world?", the 16 countries surveyed were ranked as follows: Germany, UK, Japan, Canada, France, US, Brazil, China, South Africa, India, South Korea, Russia, Israel, Pakistan, North Korea, Iran.

'Important emerging-market player'

"The growing credibility of middle powers is the story this year, especially Brazil and South Africa," GlobeScan chairman Doug Miller said in a statement on Monday, when the latest poll results were released.

Catherine Grant, head of economic policy at the South African Institute of International Affairs, told local newspaper Business Day that the poll "reaffirms South Africa's position as an important emerging-market player that can no longer be ignored".

Grant added that the results would give South Africa a boost ahead of its first meeting as a member of the Brics (Brazil, Russia, India, China and now South Africa) bloc in China in April.

The results are based on 28 619 in-home or telephone interviews conducted across 27 countries by international polling firm GlobeScan, together with the Program on International Policy Attitudes (Pipa) at the University of Maryland.

Ups and downs

Respondents were asked to rate the influence in the world of 16 major nations plus the European Union.

Overall, 13 of the 16 nations rated posted increases in positive ratings. These include the USA (up by four points to 49% positive) and the UK (up five points to 58%, making it, for the first time, the second most positively rated country).

In marked contrast, the three most negatively viewed countries saw their ratings go from bad to worse, including Iran (59% negative, "up" three points), Pakistan (56% negative, "up" 5 points), and North Korea (55% negative, "up" 6 points).

Israel, for many years among the least positively viewed nations, bucked this trend, keeping its negative ratings at 49% and showing a slight lift in positive ratings, from 19% to 21%.

"While last year relatively dour views of nations were prevalent – perhaps reflecting the mood of the economic downturn – the mood now seems to be relatively upbeat," said Pipa director Steven Kull.

Who likes South Africa?

According to the survey, 42% of people globally have positive views of South Africa, a seven percentage point increase since 2010, while negative views of the country remained steady at 27%.

Of the 27 countries surveyed, 17 have positive views of South Africa, two have "lean negative" views, while eight are divided.

South Africa is particularly popular among its African counterparts, with positive views highest in Kenya (73%), Nigeria (67%) and Ghana (57%). In Egypt, positive views rose dramatically, by 26 points to 40%, while negative ratings fell by 14 points to 13%, making the overall view of SA shift from negative to positive.

In Brazil, views of South Africa shifted from being divided in 2010 to "leaning positive" in 2011 (42% vs 36%), the survey found, thanks to a seven-point drop in negative views. Views of SA were 48% positive in Mexico and 43% postive in Chile, but divided (23% versus 24%) in Peru.

"Views are getting warmer in North America, with significant improvements observed in South Africa's positive influence ratings in Canada (45%, up 9 points) and the US (50%, up 13 points)," the survey found.

South Korea's view of South Africa improved from divided to positive (54%, up 14 points), while favourable opinions tripled in Turkey (43%, up 30 points).

European opinions towards South Africa are mixed, according to the survey. Spain went from being negative to divided (35% positive, up 15 points), but the United Kingdom went from leaning positive to divided, with a 17-point increase in negative views (to 42%) outweighing a seven-point rise in positive views (to 43%).

While Italians were divided in 2010, 54% are now leaning favourable (up 14 points), while negative ratings have dropped nine points to 28%. Germany is the only country in Europe with overall negative views towards South Africa.

Australia's opinion remained divided in 2011, with positive and negative ratings of SA both up 13 points to 43%. In the Philippines, positive views have increased by 11 points, but opinion remains negative overall (35% positive versus 52% negative).

In China, views have shifted since 2010 following a 22-point rise in negative ratings (to 41% in 2011), and the Chinese public is now divided. In Indonesia, close to four out of 10 rate South Africa positively (38%, up 7 points), and opinion has shifted from divided to leaning positive.

"The least favourable countries towards South Africa are Japan, Pakistan, and Russia (16%, 17%, and 19% positive views respectively)," the survey found. "The public in these countries are divided, and all three have high proportions of people who did not state an opinion on this question."

"The least favourable countries towards South Africa are Japan, Pakistan, and Russia (16%, 17%, and 19% positive views respectively)," the survey found. "The public in these countries are divided, and all three have high proportions of people who did not state an opinion on this question."

Hmmm - I think I can answer this in a toungue in cheek way only ( I aint no economist )
Pakistan doesnt like us because we now have 2 of the best Moslem cricketers in the world, and we have recovered from our matchfixing scandals under Hansie an are the darling again ( ok perpetual bridesmaid at least ) while their rep at the only think they were good at is in tatters

Russia are still anti SA because of SA's stance against communism back in "die ou dae" - though if they only knew what the labour unions and Malema were up to, theyd be in fits of exstacy lol - I wonder in Russia hadnt been knocked out of the WC qualification by lowly Slovenia, whether this would have changed with all the Russian oligarchs and plutocrats coming in to cheer the team and seeing SA for themselves - and perhaps follow up with investments with said Malema and co no doubt.

Japan dont like us coz we chase their whaling fleets away ( wait, isnt that Taiwan ) - and will probably steal the 2020 olympics from them too

The Japanese got frightened out of their little yellow skins by the bad press before the world cup, and I think they are still too frightened to notice that their team actually survived the tournament.
Dont think any amount of marketing would change their views, in the short term.

Pakistan - seriously, if they just paid one visit to Bo Kaap they would be amazed. Maybe we should market the Muslim connection in Karachi.
Although do we care?

And Russia - a few photos of Clifton and the Camps Bay strip in the Moscow underground would fix that quick smart.

Now get tourism SA on it - now!

^^I am usually in agreement with your take on matters but I have to take exception to your use of the phrase "little yellow skins". I am not trying to be sanctimonious but I think that's a bit derogatory to describes asians thus, I'm sure you meant it in jest and maybe even tounge-in-cheek but still. Otherwise I appreciate your patriotism. Sharp...

The Japanese got frightened out of their
little yellow skins by the bad press before the world cup, and I think ...
:ohno: :nono: Those are my people, not animals. I lived there and was accepted without prejudice.

^^So wena, what's your beef with your black South Africans? You quick to jump to Asian's defence but you lambast your fellow balck countrymen in the most derogatory manner.What's your story eintlik?

Briker, relax dude, it was just a little politically incorrect humour a la Inspector Clouseau and Kato...I know we are all squeeky clean these days, but come on guys!

And by the way - aren't you in Taiwan? Are you saying the Taiwanese are the same as the Japanese? Because that is way worse than what I said...

Parliamentary Question: Presidency: Special trade benefits as member of BRICS

Written by Presidency
Tuesday, 15 March 2011 11:54

Mr D A Worth (DA-FS) to ask the Deputy President:

(1) What special trade benefits will South Africa receive as a member of the Brazil, Russia, India, China group (BRIC) in respect of (a) imports from and (b) exports to these countries;

(2) whether BRIC countries will be encouraged to import more goods from South Africa; if not, why not; if so, what are the relevant details;

(3) whether there are any special benefits for (a) South African companies which are or
will be investing in BRIC countries and (b) companies from BRIC countries which are or will be investing in South Africa; if not, why not; if so, what are the relevant details?

REPLY


President JG Zuma has been invited to attend the Third BRIC Summit by President Hu Jintao in his capacity as host for this Summit. This will be the first time that the South African Head of State will participate in a BRIC Summit – which will become BRICS given South Africa’s membership. At this Summit, the President is expected to address issues of national interest as they pertain to (i) our African agenda, (ii) the strengthening of South-South Cooperation, (iii) boosting trade and investment opportunities, (iv) reforming multilateral institutions as well as (v) furthering our growth and job creation imperatives as expressed by Industrial Policy Action Plan (IPAP2) and the New Growth Path.

You would have heard Minister Gordhan comment in his budget speech as follows: “South Africa’s invitation to join the BRIC economies [Brazil, Russia, India and China] reflects this broadening of the sources of economic growth. Over the next five years, these economies will account for 36 percent of world economic growth. We have to construct our own growth and development strategies to propel our economy forward, create jobs and compete on the global stage.”

The BRICS Summit will be hosted in April 2011 and since the host country has not as yet formally announced the date for the Summit and agenda related aspects, South Africa is not in a position to publicly comment on specific issues related to the agenda, which is also still under discussion.

South Africa is at this stage not in a position to comment on any special BRICS trade and investment regime designed for us, but will make these public once finalised with fellow members. Currently, existing bilateral agreements with each of our counterparts obtain.

At this stage it is expected that the normal investment regimes will pertain, but you will see that at the last BRIC Summit, an agreement was signed between BRIC Development Banks in April 2010 of which the intent was to and I quote “promote economic and investment cooperation within the framework of BRIC countries” which will in future include a South African banking party where such discussions could also take place.

I thank you.



http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=14147:parliamentary-question-presidency-special-trade-benefits-as-member-of-brics&catid=86:parliamentary-questions&Itemid=187

SA aims for free-trade zone for Africa
Carin Smith
Mar 15 2011 16:11

Cape Town - The possibility of a free-trade zone stretching from the Cape to Cairo would probably be tabled in South Africa by mid-year, according to Trade & Industry Minister Rob Davies.

On Tuesday, at international consultancy Global Pacific & Partners’ fifth Africa Economic Forum in Cape Town, he said that the South African government wanted to highlight the importance of such a immense free-trade zone at the next Southern African Development Community (SADC) conference.

It would have to be brought about in collaboration with the Common Market for Eastern and Southern Africa (Comesa) and the East African Community (EAC), involving 29 countries with some 700m people.

Africa needs a big regional market such as this to stimulate growth. African countries must learn to stand together at international level and extract greater economic benefit for the continent, said Davies.

Growth in its domestic market was originally the catalyst for India's economic growth, and Brazil and China were also busy developing their own domestic markets, he said.

There were 54 countries in Africa – what might China look like today if colonialism had divided it into 54 countries?

The Department of Trade & Industry, according to Davies, was busy with negotiating with India over the possibility of a preferential trade agreement.

Davies said that South Africa’s membership of the Brics countries indicated that it was a developing economy in its own right. In his view this served to amplify South Africa’s lasting and important involvement in Africa.

The challenges he expected to the establishment of a massive free trade zone included accelerating the development of infrastructure in South Africa's neighbouring countries, particularly in terms of transport.

There was also a huge challenge for African countries to add value to their exports and he would particularly like to see South Africa add value to its exports to other Brics countries.

For instance, the country received about $400/ton for mineral sands it exported. If it built a plant to convert the sands into titanium alloys, South Africa could easily earn $100 000/ton, said Davies.

- Sake24

For business news in Afrikaans, go to Sake24.com.


http://www.fin24.com/Economy/SA-aims-for-a-free-trade-zone-for-Africa-20110309

China sets April date for "BRICS" emerging powers summit
March 31, 2011 9:22 PM EDT

Leaders from five of the world's top emerging economies will gather in China mid-next month to discuss economic, financial and security concerns, the Chinese government said on Thursday, setting a date for the "BRICS" summit.

The announcement came on the same day that China played host to a meeting of officials from the G20 group of major advanced and emerging economies, another sign of Beijing's growing stature in global economic diplomacy.

Chinese President Hu Jintao and leaders from Brazil, Russia India and South Africa will meet on the far southern Chinese island-province of Hainan on April 14, the Chinese Foreign Ministry said on its website (www.mfa.gov.cn).

The summit is unlikely to achieve much concrete, but it will give the world's big rising economies a venue to coordinate views on global financial reforms, commodity prices and other shared concerns.

"The BRICS leaders will exchange views on international developments and economic, financial and development issues, and will also plan future cooperation among the BRICS countries," said the short statement.

This was the first time China gave a firm date for the meeting -- the third "BRIC" summit and the first to include South Africa, creating the new "BRICS" name for the group.

The group emerged as a loose united front to press the rich Western economies, especially the United States, which traditionally dominated global diplomacy.

But there are many disparities among the BRICS member countries, and the past two summits of the evolving group have not achieved much. This time, too, strains over China's currency policies and trade surpluses could make real agreement even harder to reach.

Brazilian President Dilma Rousseff will make a bilateral visit to Beijing to coincide with the summit, and her government officials have said they want to discuss the Chinese yuan , which they say is held so cheap it has helped fuel a flood of Chinese exports to Brazil.
The leaders may also discuss Libya.

China, with Russia, India, Brazil and other developing countries have condemned the U.S.-led air strikes on Libyan forces. South Africa, on the other hand, voted in favour of the United Nations Security Council resolution authorising the air strikes.



http://www.ibtimes.com/articles/129356/20110331/emerging-economies-economic-brics-summit.htm

Russia sees BRICS as key element of new global economic model
14:06, April 01, 2011

The BRICS group is a key element of new global economic model and is expected to push on the reform of global monetary system, the Russian Foreign Ministry said on Thursday.

The ministry's spokesman Alexander Lukashevich told a briefing that Russia is optimistic of future of the group, which together accounted for 25 percent of the global GDP.

He also noted that South Africa's accession to the group will boost the alliance's relation with the African Union and other international organizations.

"South Africa wields great influence not only in the African Union but also in the Non-Aligned Movement, which will doubtless help foster a dialogue between these important international structures and the BRICS," Lukashevich said.

With regards to the upcoming BRICS summit in the Chinese city of Sanya, Lukashevich said that Russia expected the meeting to reach consensus on further cooperation on the reform of the global monetary system.

"This (consensus) will be an important contribution to the preparations of the G20 summit to be held in France late this year, " he added.

Lukashevich said Russia also expected the summit to mull out solutions on bolstering global peace and stability, especially in the context of the latest unrests in the Middle East and Northern Africa.

BRICS is a grouping of major emerging economies that include Brazil, Russia, India, China and South Africa.

According to the summit's agenda, the BRICS leaders will have in-depth exchanges of views on the international situation, economic, financial and development issues and outline their future cooperation in Sanya.

Source: Xinhua

http://english.peopledaily.com.cn/90001/90777/90853/7337872.html

Here we go again. Here's a CNN video interview with Jim O'Neil on SA's invitation to BRIC.

In short, he says he is still astounded that SA got invited, and that the BRIC countries probably did it to shut persistently pestering SA up! Geez! Does this man have a clue? I am also astounded that he bases BRIC membership and economic potential purely on a country's population size, and completely ignores issues like quality of life, stability, and how a big population means you need staggering growth rates to keep down unemployment. He openly punts for Nigeria's membership in BRIC but conveniently neglects to comment on:

- Nigeria's low productivity rate (while slamming SA's);
- Nigeria's higher unemployment rate (54% vs SA's 25%; Nigeria's economy has been growing faster than SA these past few years, at approx 6-7% PA. However, it actually needs to be growing at 11-12% to address its unemployment rate; and we thought SA was having it tough needing to hit 7% GDP growth PA to tackle unemployment);
- Nigeria's unacceptably high 95% exchange earnings and 80% national budgetary reliance on oil revenue (vs SA's diversified economy);
- Nigeria's high inflation rate (11% vs SA's <4%)
- Nigeria's poverty rate (70% in Nigeria vs 50% in SA);
- Political instability, and lack of regulatory and infrastructure environment (looks like latest elections are going to be postponed because of logistics chaos).

Interestingly, while he previously openly punted Egypt ahead of SA in the past, he didn't even mention Egypt this time round. Seems he's still wiping the egg off his face given the recent political events there and the associated impact on the economy (Egyptian pound is still sliding and it's projected to hit 6.30/USD by year end, from approx 5.80 before the political crisis; with this, Egypt's nominal GDP will slip further behind SA's, and possibly Nigeria's too).

------------------

South Africa an economic powerhouse? 'Nowhere near,' says Goldman exec
April 5, 2011 -- Updated 1102 GMT (1902 HKT)

The world's top emerging markets have invited South Africa to their next meeting


O'Neill says the country's economic prospects can't be compared to the BRIC block

CNN's Marketplace Africa offers viewers a unique window into African business on and off the continent. This week the show interviews Jim O'Neill, chairman of Goldman Sachs Asset Management and creator of the BRIC acronym.

London (CNN) -- When British economist Jim O'Neill coined the term BRIC at the turn of the century -- referring to Brazil, Russia, India and China, countries he predicted would be future economic powerhouses -- it was difficult to imagine how big an impact the acronym would have.

In the following years, the four BRIC countries formed a federation that has met annually since 2009 to discuss their role in the global economy.

"Who would have ever dreamt that there would be a BRIC political club? It certainly isn't something that I ever imagined," O'Neill, now chairman of Goldman Sachs Asset Management, told CNN's Nima Elbagir.

The BRIC partnership took a new turn last December when its four members invited South Africa to join them at their third heads-of-states summit, to be held in Beijing this month.

But the news of the formal invitation, which came after persistent lobbying by the South African government, has left some economists puzzled.

According to O'Neill, South Africa's economy of about $350 billion can't come close to matching the prospects of the BRIC countries, which account for about half of global growth.

"It is nowhere near constituting a BRIC, and without staggering productivity improvements and major immigration or improvements in birth rates, etc., it is never going to get there," said O'Neill.

Some analysts argue that South Africa is simply too small to join the group of the world's top-four major emerging markets. Its population of about 50 million cannot be compared to the BRIC nations, which represent around 40% of the world's people.

But South African officials have said that it is the country's strategic importance that matters and not its size.

In December 2010, following the BRIC nations' invitation, South Africa's minister of international relations and cooperation Maite Nkoana-Mashabane said: "The rationale for South Africa's approach was in consideration of a matter of crucial importance to BRIC's member states -- namely the role of emerging economies in advancing the restructuring of the global political, economic and financial architecture into one that is more equitable, balanced and rests on the important pillar of multilateralism."

O'Neill said: "South Africa has played on the notion that because they do have developed markets and Western governing standards in some areas they've said 'look, we are the gateway to the rest of Africa.'"

He said this argument had some legitimacy but added that it would be interesting to see how it would resonate with the rest of the countries on the continent.

"What intrigues me is whether other big African countries accept that and I doubt that Nigeria is going to be very happy about that," O'Neill said.

"In the context of the continent, Nigeria is the place that really matters," he added, pointing to the country's 155 million population.

Nigeria has been identified by Goldman Sachs as one of the nations that constitute the "Next 11" group -- a phrase used to describe the 11 most-populous countries from the emerging world after the BRIC block (besides Nigeria, these are Mexico, Egypt, Turkey, Iran, Pakistan, Bangladesh, Indonesia, Vietnam, South Korea and the Philippines).

O'Neill says that within that group, there are four countries that could potentially join the BRIC block.

"Korea, Turkey, Indonesia, and Mexico are big enough to stand on their own feet and are increasingly similar economies to the so-called advanced ones of the four BRICs," he said.

When asked whether the BRIC label would bring with it a huge degree of international investment interest for South Africa, O'Neill remained cautious.

"Being part of the BRIC political club doesn't guarantee that you are going to be regarded as a BRIC economically," he said.

"At this particular point in time, just because South Africa has been accepted into that club doesn't change the way that I'll think about it in terms of how we focus on what constitutes a BRIC or not and whether it affects others in terms of investment flows."

But O'Neill is not entirely negative. He urges South African leaders to be bolder about basic policies to boost productivity and not be too concerned about which "club" they belong to or not.

He said: "Stop thinking that the world owes South Africa something for its past and do things to create a better environment where you can attract a lot more international businesses.

"And most importantly, embrace all your own people in a competitive, open way and find everybody jobs -- unemployment in South Africa is a huge dilemma still."

Nima Elbagir and Teo Kermeliotis contributed to this report.



http://edition.cnn.com/2011/BUSINESS/04/05/jim.oneill.africa.bric/?hpt=C2

Bric countries defend elevation of SA into their ranks

Peers defend extension of Bric status but questions are being asked how membership will benefit South Africa
LOYISO LANGENI

Published: 2011/04/05 06:33:13 AM

MEMBERS of the Bric group of countries — Brazil, Russia, India and China — yesterday defended the extension of Bric status to SA amid rising criticism of how the country plans to use this to advance its economic and foreign policy interests.

"From a Brazilian perspective, the choice of SA was a no-brainer," Brazil’s envoy to SA, Jose de Sá Pimentel, said. "The fact that SA is in Bric is simply to recognise a reality that Africa should be in, and SA is a legitimate representative of Africa."

Russia plans to use the bloc to work with SA to strengthen bilateral relations and also campaign to increase the voice of developing countries in multilateral institutions.

"The enlargement of Bric through SA’s membership demonstrates its growing potential ... and its increased relevance internationally," said Anatoly Makarov, Russia’s envoy to SA.

China sees SA’s membership of the bloc as being in line with its foreign policy goals of entrenching its dominance as the lead investor of choice in African countries.

"SA is a robust emerging economy on the African continent and holds enormous potential for Bric countries," Chinese counsellor to SA, Weiqing Chen, said yesterday.

The envoys — India was not represented — were speaking in Johannesburg at a seminar to explain the significance of SA’s membership.

International Relations Minister Maite Nkoana-Mashabane said global politics had changed and emerging economies were well placed to set the agenda of multilateral institutions. "We are among the countries that have become increasingly impatient with the misrepresentation in global politics that have been dominated by the western world," she said. "We are coming in to say that it is about time that the voice of the countries of the South should also be listened to."

Members from business and the trade union movement fielded tough questions to the panelists on how SA as the smallest Bric economy will use the platform to benefit the country.

Congress of South African Trade Unions international relations expert Bongani Masuku voiced concern that Bric may be no different from other forums before it.

Jerry Vilakazi, CE of Business Unity SA, and Sonja Sebotsa of Identity Partners said they hoped SA would cultivate trade relations to ensure "massive potential" for local firms to benefit from Bric markets.

"Bric provides South African companies with an unprecedented opportunity" to make headway in those economies, Kuseni Dlamini, CE of Old Mutual , said.

langenil@bdfm.co.za


http://www.businessday.co.za/articles/Content.aspx?id=139178

Here's a direct link to O'Neil's interview...


http://cnn.com/video/?/video/international/2011/04/04/mpa.jim.oneil.s.africa.ready.cnn

Say what you might about this O'Neill guy, but he knows what he is talking about. After reading about him, I thought he was a bitter tosser, but now that I've heard him speak I can't find any reason to disagree with him. The distinction between BRICS as a political movement and BRIC(s) as an economic theory is very important to make and I feel that many people don't see that that is his point.

Are you joking? He is still using the acronym BRIC in his interview, he refuses to use BRICS!
BRIC no longer exists. He has no say on this, apart from an opinion, and everyone can have an opinion.
But the FACT is that South Africa IS part of the group! Fucking FACT - get over it!

This is ridiculous - this guy is making a fool of himself - like he is sulking because his acronym is no longer in use. Give me a break.

And yes, just a few short months ago he was stating loud and clear that EGYPT would be a better choice than SA!!!
And look now...no even a whisper - because his suggestion for an African member of the group has just gone spectacularly TITS UP!

Cmon, what do you mean he knows what he is talking about!

Here we go again. Here's a CNN video interview with Jim O'Neil on SA's invitation to BRIC.

In short, he says he is still astounded that SA got invited, and that the BRIC countries probably did it to shut persistently pestering SA up! Geez! Does this man have a clue? I am also astounded that he bases BRIC membership and economic potential purely on a country's population size, and completely ignores issues like quality of life, stability, and how a big population means you need staggering growth rates to keep down unemployment. He openly punts for Nigeria's membership in BRIC but conveniently neglects to comment on:

- Nigeria's low productivity rate (while slamming SA's);
- Nigeria's higher unemployment rate (54% vs SA's 25%; Nigeria's economy has been growing faster than SA these past few years, at approx 6-7% PA. However, it actually needs to be growing at 11-12% to address its unemployment rate; and we thought SA was having it tough needing to hit 7% GDP growth PA to tackle unemployment);
- Nigeria's unacceptably high 95% exchange earnings and 80% national budgetary reliance on oil revenue (vs SA's diversified economy);
- Nigeria's high inflation rate (11% vs SA's <4%)
- Nigeria's poverty rate (70% in Nigeria vs 50% in SA);
- Political instability, and lack of regulatory and infrastructure environment (looks like latest elections are going to be postponed because of logistics chaos).

Interestingly, while he previously openly punted Egypt ahead of SA in the past, he didn't even mention Egypt this time round. Seems he's still wiping the egg off his face given the recent political events there and the associated impact on the economy (Egyptian pound is still sliding and it's projected to hit 6.30/USD by year end, from approx 5.80 before the political crisis; with this, Egypt's nominal GDP will slip further behind SA's, and possibly Nigeria's too).

------------------

South Africa an economic powerhouse? 'Nowhere near,' says Goldman exec
April 5, 2011 -- Updated 1102 GMT (1902 HKT)

The world's top emerging markets have invited South Africa to their next meeting


O'Neill says the country's economic prospects can't be compared to the BRIC block

CNN's Marketplace Africa offers viewers a unique window into African business on and off the continent. This week the show interviews Jim O'Neill, chairman of Goldman Sachs Asset Management and creator of the BRIC acronym.

London (CNN) -- When British economist Jim O'Neill coined the term BRIC at the turn of the century -- referring to Brazil, Russia, India and China, countries he predicted would be future economic powerhouses -- it was difficult to imagine how big an impact the acronym would have.

In the following years, the four BRIC countries formed a federation that has met annually since 2009 to discuss their role in the global economy.

"Who would have ever dreamt that there would be a BRIC political club? It certainly isn't something that I ever imagined," O'Neill, now chairman of Goldman Sachs Asset Management, told CNN's Nima Elbagir.

The BRIC partnership took a new turn last December when its four members invited South Africa to join them at their third heads-of-states summit, to be held in Beijing this month.

But the news of the formal invitation, which came after persistent lobbying by the South African government, has left some economists puzzled.

According to O'Neill, South Africa's economy of about $350 billion can't come close to matching the prospects of the BRIC countries, which account for about half of global growth.

"It is nowhere near constituting a BRIC, and without staggering productivity improvements and major immigration or improvements in birth rates, etc., it is never going to get there," said O'Neill.

Some analysts argue that South Africa is simply too small to join the group of the world's top-four major emerging markets. Its population of about 50 million cannot be compared to the BRIC nations, which represent around 40% of the world's people.

But South African officials have said that it is the country's strategic importance that matters and not its size.

In December 2010, following the BRIC nations' invitation, South Africa's minister of international relations and cooperation Maite Nkoana-Mashabane said: "The rationale for South Africa's approach was in consideration of a matter of crucial importance to BRIC's member states -- namely the role of emerging economies in advancing the restructuring of the global political, economic and financial architecture into one that is more equitable, balanced and rests on the important pillar of multilateralism."

O'Neill said: "South Africa has played on the notion that because they do have developed markets and Western governing standards in some areas they've said 'look, we are the gateway to the rest of Africa.'"

He said this argument had some legitimacy but added that it would be interesting to see how it would resonate with the rest of the countries on the continent.

"What intrigues me is whether other big African countries accept that and I doubt that Nigeria is going to be very happy about that," O'Neill said.

"In the context of the continent, Nigeria is the place that really matters," he added, pointing to the country's 155 million population.

Nigeria has been identified by Goldman Sachs as one of the nations that constitute the "Next 11" group -- a phrase used to describe the 11 most-populous countries from the emerging world after the BRIC block (besides Nigeria, these are Mexico, Egypt, Turkey, Iran, Pakistan, Bangladesh, Indonesia, Vietnam, South Korea and the Philippines).

O'Neill says that within that group, there are four countries that could potentially join the BRIC block.

"Korea, Turkey, Indonesia, and Mexico are big enough to stand on their own feet and are increasingly similar economies to the so-called advanced ones of the four BRICs," he said.

When asked whether the BRIC label would bring with it a huge degree of international investment interest for South Africa, O'Neill remained cautious.

"Being part of the BRIC political club doesn't guarantee that you are going to be regarded as a BRIC economically," he said.

"At this particular point in time, just because South Africa has been accepted into that club doesn't change the way that I'll think about it in terms of how we focus on what constitutes a BRIC or not and whether it affects others in terms of investment flows."

But O'Neill is not entirely negative. He urges South African leaders to be bolder about basic policies to boost productivity and not be too concerned about which "club" they belong to or not.

He said: "Stop thinking that the world owes South Africa something for its past and do things to create a better environment where you can attract a lot more international businesses.

"And most importantly, embrace all your own people in a competitive, open way and find everybody jobs -- unemployment in South Africa is a huge dilemma still."

Nima Elbagir and Teo Kermeliotis contributed to this report.



http://edition.cnn.com/2011/BUSINESS/04/05/jim.oneill.africa.bric/?hpt=C2

I don't get O'Neill's obsession with population or population growth. IMO and I think there's plenty of literature backing me on this, nations only begin to prosper when they reduce their population growth. SA needs to slow population growth and it is already happening, SA probably has the lowest birth rate in Africa. In about 20 years SA will at most have 60 million citizens whereas Nigeria will probably have something like 200 million plus and Egypt probably more than a 100 million, I'm still willing to bet that SA will still be a larger and more powerful economy by then, notwithstanding a smaller population. 3rd world countries need to curb their birth rates through female education, abortion (controversial I know), etc, this sets the foundation for prosperous economies.

This guy needs a slap, cmom - he says...

"What intrigues me is whether other big African countries accept that and I doubt that Nigeria is going to be very happy about that," O'Neill said.

"In the context of the continent, Nigeria is the place that really matters," he added, pointing to the country's 155 million population

He doubts whether Nigeria, who didn't lobby to be in the group, who weren't invited to the group, and who simply arent in the group, are going to be HAPPY!!!

Is this an economist talking, or a twat? Who gives a RATS what Nigeria think about BRICS.
And once again, what happened to Egypt - apparently they also mattered to Jimmy boy up until a few weeks ago...

The other members have explained why they wanted SA in, SA wanted in, done deal.

BRICS is going to boom. You know what they say, the best revenge is to live well...

No, you missed my point. From an economic perspective, South Africa doesn't qualify as a BRIC. At least it doesn't qualify according to the original BRIC criteria. I think that's a pretty fair assessment. Future projections of growth don't really matter. The BRIC countries are already big economies in their own right.

What the original BRIC countries have done however, is to add more value to BRIC in terms of political power. In that sense, South Africa is a perfect match. We're not the richest country but we do generate an awful lot of political swing, especially in sub-Saharan Africa. As a strategic position, we're perfect for BRICS.

I don't think he's sulking because his acronym is no longer in use. I just think he is bemused that he coined a term that has lead to what is likely going to become a powerhouse of global politics. It's fair for him to defend the original BRIC criteria, and it's also fair for him to say South Africa has no place in the original BRIC list. However, SA is now a member of BRICS so the argument in either direction is neither here nor there.

But he didn't form the group - it formed, and he came up with an acronym to name it - and the acronym stuck, being cleverly formed by the first letters of each country!

And we are not saying SA is the biggest or fastest growing economy at all, thats exactly the point - and it is blatantly obvious that the other 4 members have massive economies.
No, we are saying SA is there for a whole host of reasons - influence in Africa, position and infrastructure, dominance in key markets, political presence etc.
And that is fine, and all the members agreed, and we have BRICS.

What is ridiculous is for this guy to state that Egypt and Nigeria would be 'more deserving', confidently predicting their economic futures.
Then Egypt collapses, and suddenly there is no mention of Egypt from this overly vocal man.
Then to say he is not sure if other big African countries would accept it??!!!

I mean really, what is the relevance of that. They can do what they want with the reality of BRICS, how exactly are they not going to accept it?

He goes on to give SA a lecture 'stop thinking the world owes South Africa something'!!!

I am sorry, what? Who the f*ck does this guy think he is? Read that interview again, and it is hard not to come away with the feeling he has a bias here. Maybe the vuvuzelas annoyed him during the world cup...but something is not right.

BRIC economy to surpass US by 2015: Study


Read more on »south africa|russia|global economy|economy|china|brics|brazil|america

BEIJING: BRIC countries are expected to contribute one-third of the world's GDP increment in 2015, by which time their total economy will surpass America , according to a leading Chinese think tank.

Estimated on the basis of current market exchange rates, the BRIC (Brazil, Russia , Indian, China) grouping would make up about 22 per cent of the world economy by then, said the Annual Report on BRICS' Social-Economic Development (2011), a blue book released Thursday by the Social Sciences Academic Press of China.

BRIC formally became BRICS this year with the admission of South Africa into its fold.

This year's BRICS summit is scheduled to be held in China's Sanya resort on April 13-14.

Prime Minister Manmohan Singh , along with the heads of other BRICS countries, is scheduled to attend it.

The report predicted that the BRICS (Brazil, Russia, Indian, China , South Africa) countries would have a stable and fairly rapid growth momentum in the next 15 years due to a favorable external environment brought on by the steady growth in major developed economies.

Lin Yueqin, the book's executive editor, noted in the abstract that the purpose of the study was to reveal the underlying rules of development in emerging economies and the tendencies of global development and governance, Xinhua news agency reported today.

Nigeria is not even on this list...and Egypt is struggling.

Looks like the BRIC countries made the right choice after all, hey Jim?

South Africa most competitive country in Africa – report South Africa, What you need to know | Claude Harding | September 16, 2010 at 15:39
--------------------------------------------------------------------------------
Share inShare0South Africa has been ranked as the most competitive African country in The Global Competitiveness Report 2010–2011 index.

South Africa ranks in the 54th position out of a total of 139 featured economies.

The top ten ranked African countries are as follows:

South Africa (54)
Mauritius (55)
Namibia (74)
Morocco (75)
Botswana (76)
Rwanda (80)
Egypt (81)
Algeria (86)
The Gambia (90)
Libya (100)
In 139th position, Chad is the lowest ranked country, both in Africa and globally.

The Global Competitiveness Report’s competitiveness ranking is based on the Global Competitiveness Index (GCI), developed for the World Economic Forum. The GCI is based on 12 pillars of competitiveness, providing a comprehensive picture of the competitiveness landscape in countries around the world at all stages of development. The pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.

The full report contains the following commentary on South Africa:

South Africa remains the highest ranked country in sub-Saharan Africa. While it has dropped somewhat in rank since last year, its performance has in fact remained stable and the decline reflects improvements in other countries. South Africa still benefits from the large size of its economy, particularly by regional standards (it is ranked 25th in the market size pillar). It also does well on measures of the quality of institutions and factor allocation, such as intellectual property protection (27th), property rights (29th), the accountability of private institutions (3rd), and goods market efficiency (40th).

Particularly impressive is the country’s financial market development (ranked 9th), indicating high confidence in South Africa’s financial markets at a time when trust has been eroded in many other parts of the world. South Africa also does reasonably well in more complex areas such as business sophistication (38th) and innovation (44th), benefiting from good scientific research institutions (ranked 29th) and strong collaboration between universities and the business sector in innovation (ranked 24th).

^^Yeah, but to Jim all that does not matter - only population size matters :ohno:

That and he has a hatred of SA for some reason

I really still don't get what everyone's beef with Jim is. There's no way you can expect him to change his mind on South Africa. If he did he would become a politician. He laid down criteria in 2001, and he still doesn't think SA meets it. He has been asked which countries would be closer to meeting those specific criteria and he suggested Nigeria and Egypt. As far as I see, there's no emotional connection to what he says, which is how it should be. As South Africans, it's our immediate reaction to defend our country any way we can, but there's really no need in this case. O'Neill has no say over the formation of a political bloc, so who cares what he does say apart from the fact that is interesting, AND it makes sense.

Juanw - it's obvious that the Goldman Sachs criteria are more complex than simply looking at population size, and Diggerdog - Jim never said that the BRIC countries chose the wrong country. He simply reiterates that he would use different criteria. Just because someone has an opinion of our country that isn't wrapped in warm fuzzy loving feelings doesn't mean that it's not valid.

I know ahead of time that this isn't going to go anywhere so I'll leave it there.

No no no GDA, this is nothing to do with warm and fuzzy, don’t come with that.

Yes, we can plainly see the economy size/population size angle – as I have said numerous times before. We acknowledge that, OK?

Why can’t this guy acknowledge the fact that they wanted SA, the reasons they wanted SA, and the fact that SA is part of the group? What is the problem there?

You say he makes sense – but he was pushing Egypt ahead of SA, which PLAINLY was incorrect – do you agree, or do you think Egypt would be a better fit for the BRICS?
You cannot possibly think that…

And as you say, what he thinks has no actual bearing on actual events anyway – so why oh why is he still TALKING?

Lastly, he said, amongst other things, that South Africa should stop thinking the world owed it something!!! Now please, where the hell does that come from?

Alright, Egypt, no. I don't know why he had anything to say about them, but I can understand Nigeria. Also, no idea why he is under the impression that SA thinks it is owed something. We have some common ground there.

Where we agree 100% is on the talking issue. I don't know why he still has such an opinion, but maybe it's the media, maybe it's an ego thing. Either way, he should just give up.

Ok, cool. I just got so annoyed by this, I guess I could calm down a little..!

^^lol, take it easy mate. If we didnt have haters, how would we know that we doing well? Haters are a barometer...

SA ready for Brics meeting
Apr 10 2011 12:51

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Pretoria - On Thursday, during the Brics talks, South Africa will ask for greater direct foreign investment and trade in its value-added industries, said the Department of Trade & Industry.

South Africa's agenda is clear and the country has the support of business, declared Lionel October, acting director-general of Trade & Industry.

In December last year China invited South Africa to become part of Bric (comprising Brazil, Russia, India and China) and this will be the country's first participation in the talks. South Africa's inclusion therefore turns Bric into Brics.

In 2007 Bric was created as a pressure group against wealthy Western economies.

The South African delegation, led by President Jacob Zuma, included Rob Davies, Minister of Trade & Industry, Maite Nkoana-Mashabane, Minister of International Relations & Cooperation, and representatives of another 50 South African enterprises.

According to October, the creation of further business opportunities is a top priority for his department.

Davies will meet his counterparts in the other Brics countries ahead of the official Brics discussions to coordinate their viewpoints on the Doha rounds.

According to October, South Africa's view is that developed countries should reduce their support for agriculture because that prevents South Africa from supplying its own agricultural products – where it has a competitive advantage – to these countries.

In the past South Africa made large concessions related to tariff reductions in the Uruguay round, so the current Doha round can expect fewer concessions from South Africa, he said.

But Dr Martyn Davies, chief executive of Frontier Advisory, is convinced that Brics collaboration on trade policy would tend to encourage inter-Brics trade.

Brics could also bring South Africa tangible benefits, such as learning from Brazil and China’s economic growth strategies, said Davies. In his view early criticism of South Africa's inclusion because of the country's relatively small economy was misplaced.

South Africa's economy and economic growth, he says, may be too small to be part of Brics, but the country does have the corporate muscle to take part.

According to Davies, South Africa's global corporate power puts it on an equal footing with the other Brics member states, since South Africa very possibly has more international companies than Brazil, Russia and India have.

The Brics talks start on April 14.

Table goes to prove O'Neil's point. Sorry it's in Portuguese.

http://i54.tinypic.com/2i6m3k1.jpg
http://i52.tinypic.com/xfbv3r.jpg
http://i54.tinypic.com/e37l5.jpg

Roney, do you just not read the previous posts out of laziness, or do you not understand them?
There is no point to prove.
Anyone can see that the other economies in the group are bigger, with bigger populations etc.
We dont need it presented in table form to know that.
We have said that countless times before in this discussion.

In the very previous post, you will see they mention that SA competes very well on a corporate level.
Position. Politically. Influence in Africa. The structure of the SA economy.
These and other reasons are why BRICS now exists. All in the group know they can benefit.
And South Africa will certainly benefit.

You can cut and paste a few more tables if you want, but it means nothing to the newly formed BRICS.

Alex Roney, you obviously misunderstand the point of BRICS. It is a *political* 'club', not a purely economic club (which is what O' Neil and people like you seem to think it is and should be). When it comes to political and diplomatic weight on the African continent, SA is undoubtedly king. Nigeria and Egypt are far, far behind in this regard. SA country also punches way above its weight class, even globally, on political issues. O' Neil coined the term but even he didn't foresee it would become a formal association. He has no authority on who should members. And it's the prerogative of those countries who they want to have as part of their association. No amount of bitching and complaining by you or anyone else, O' Neil included, at SA's inclusion, is going to change that. In fact, I think it's hilarious that O' Neil's views have been totally disregarded by BRIC countries.

O'Neil is an economist and sees things through very narrow lenses (big population size = big potential markets = future profits). If he was a political scientist, he would see things very differently and realise that 3 current members of BRIC are Asian (Russia, China, and India), while Europe is represented by Russia. The Americas / Latin America / South America is represented by Brazil, which leaves only Africa without a representative in the 'club'. In this regard, for so many reasons, SA is the leading candidate (Egypt and Nigeria are both disasters happening / waiting to happen, and too politically unstable to merit being a representative / candidate member of the African continent). I think the current problems in Nigeria and Egypt only underline why SA is the most appropriate candidate for the continent.

O'Neil has lost tremendous credibility in my books. A few months ago he was arguing that SA was not appropriate member of BRIC and that Africa is the next BRIC. http://www.ft.com/cms/s/0/6c00e950-b153-11df-b899-00144feabdc0.html#axzz1JEMgA8ua

Now, he's changed his mind and says the Middle East is the next BRIC. http://www.thisislondon.co.uk/standard-business/article-23928954-oneill-tips-arab-world-to-be-next-big-opportunity.do

O' Neil's (lack of) credibility aside, I think you should move past your rants on SA. BRIC is now BRICS. Take a deep breath and live it.

A very good analysis by an astute and experienced politician and diplomat on the strategic merits of SA's inclusion in BRICS (and a bitch-slap comment on O'Neil)...

-----------------

World Imperialist Crisis drives new alignments: BRIC invites South Africa as African gateway


[A former Indian diplomat discusses the new international alignments and their political meaning. While his analysis needs to be assessed critically, the information he includes in this article is of value to all concerned with the political impacts of the world imperialist crisis.--Frontlines ed.]

China BRICS up Africa
By M K Bhadrakumar, Jan 4, 2011

There can be no two opinions that Beijing made a smart move. Its
decision to anoint South Africa as a new member of BRIC (Brazil, Russia,
India and China) will be projected as based on economic grounds, but
there are any number of other dimensions.

The decision was hugely significant politically, and its announcement
showed delightful timing – Christmas Eve. It also has vast geopolitical
potential and it is undoubtedly based on strategic considerations. The
choice of South Africa can even be spotted as a gutsy move to disprove a
prediction from Jim O’Neill, chairman of Goldman Sachs Asset Management
and guru of the BRIC concept, that Nigeria was better placed to make the
grade.

The next BRIC summit – or BRICS as it will now be known – is
scheduled for April in Beijing, where for the first time South Africa
will participate as a member of the group.

Arguably, why South Africa? In the size of its economy, growth rate or
population, South Africa lags far behind the BRIC average. Knowing that
his grip on BRIC was waning, O’Neill bestirred himself from Christmas
holidays to say, “It is not entirely obvious to me why the BRIC should
have agreed to ask South Africa to join. How can South Africa be
regarded as a big economy? And, by the way, they happen to be struggling
as well.” In fact, the rand touched three-year highs against the US
dollar when the news broke.

The gross domestic product (GDP) of South Africa is about US$285 billion
as compared to Russia or India’s ($1,600 billion), Brazil’s ($2,000
billion) or China’s ($5,500 billion). GDP never quite tells the whole
story, but even then, China has obviously made some smart calculations.

For one thing, China knew South Africa was interested to join BRIC and
assessed that it pays in many ways to show Beijing is prepared to go the
extra league to protect its number one African partner’s interests.
Beijing took a far-fetched investment decision to create political
goodwill. O’Neill’s laconic remark summed it up: “When I created the
acronym, I had not expected that a political club of the BRIC countries
would be formed as a result.”

In his celebrated 2001 paper titled “The World Needs Better Economic
BRICs”, O’Neill used the acronym as a symbol of the shift in global
economic power away from the developed Group of 7 economies toward the
developing world. He argued that by 2050 the combined economies of the
four BRIC countries would exceed the economies of the richest countries
in 2001.

Yet, he was confident BRIC would never evolve into an economic or
trading bloc – like European Union (EU) or the 10-member Association of
Southeast Asian Nations (ASEAN). However, the BRIC acronym is extended
with South Africa’s admission, and BRICS is indeed heading to form a
“political club”, sidestepping the mode of the EU or ASEAN.

India faces some strategic choices if the grouping assumes a political
orientation. Indeed, India wouldn’t dream of opposing South Africa’s
admission but, strangely, to date, the Indian foreign ministry has not
pronounced a word.

Both Russia and Brazil have acclaimed the Chinese decision and,
interestingly, both noted the political significance of the decision.
Russia’s foreign ministry said South Africa is a “leading African
country” whose entry into BRIC is “in line with … the emergence of a
polycentric international system”. The Brazilian foreign ministry
commended that South Africa will make an “important contribution” to the
BRIC both on account of its economic relevance and its “constructive
political action”.

Brazil added, “The addition of South Africa will expand the geographic
representation of the [BRIC] mechanism at a time that we are looking, on
the international level, to reform the financial system and increase
democratization of global governance.” Part of India’s nervousness
probably lies in the reference by Brazil about “democratization of
global governance”.

India increasingly pins hopes on the US to advance its bid for UN
Security Council membership and is making adjustments to its foreign
policy so as to meet with Washington’s approval. Its dilemma will be
acute if the BRICS moves toward a common position on international
issues that runs against the grain of the US’ global strategies.

The official China Daily newspaper indirectly took note of Delhi’s
lukewarm attitude to the grouping. In a commentary titled “Building
BRICS” last week, it left out India while making the following reference:
China, Russia and Brazil assumed an important role when the
international community sought to resolve the Iran nuclear issue and
tensions in the Middle East and on the Korean Peninsula. Their greater
say in international affairs and inevitable assumption of more
responsibilities are a significant contribution to multilateralism and
have lifted the status of the developing world as a whole in the
international arena.
The logical thing would have been to simply merge BRIC and IBSA (India,
Brazil and South Africa). But India seems to have turned down the idea.
“IBSA has a personality of its own. It is three separate continents,
three democracies. BRIC is a conception devised by Goldman Sachs. We are
trying to put life into it”, Indian Prime Minister Manmohan Singh
suggestively explained a few months ago while underlining the high
importance that Delhi ascribed to IBSA (which excludes China).

India sees its interests intersecting with China’s in Africa. Delhi has
decided that Africa will be one of its three “major foreign policy
targets” in 2011. During his visit to Delhi in November, US President
Barack Obama pointedly singled out Africa as a region where the two
countries should closely cooperate. Indian Foreign Minister S M Krishna
was explicit that India saw itself locked in a rivalry with China.
“China is taking more than normal interest in the Indian Ocean and we
are monitoring it carefully.”

Beijing’s decision to bring South Africa, which is the heavyweight in
Africa, into BRIC pre-empts the proposed US-Indian collaboration.
Without doubt, both Washington and Delhi would estimate to their
discomfort that the grouping’s anchor of economic logic has been
unmoored. Neither expected Beijing to move so fast.

Beijing estimated that the time has come for expanding the geographic
spread of the BRIC so that it can aspire to play a more significant role
on the world stage. In 2011-2012, all the BRICS countries will serve as
members of the 14-member UN Security Council. Five out of 14 makes a
hefty share – almost one-third, which also is around BRIC’s share of the
world economy.

During the first decade of the century, BRIC contributed 27.8% of the
world GDP growth in US dollar terms and made up about a quarter of the
world economy in purchasing power parity (PPP). According to Goldman
Sachs, BRIC is set to contribute to about 49% of the global GDP growth
by 2020 and account for a third of the world economy in PPP.

Arguably, South Korea, Mexico and Turkey, popularly known as the “growth
economies” (each accounting for about 1% of global GDP) have a better
claim than South Africa to join BRIC. The South African economy of $285
billion compares poorly with South Korea’s ($830 billion), Turkey’s
($615 billion) and Mexico’s ($875 billion). But South Africa has one
distinctive asset: it is the “gateway” to an entire continent for trade
and investment – and for making geopolitical forays.

To quote the People’s Daily, “The role of South Africa’s traditional
trading partners – Western countries – has been lessened significantly
… China is South Africa’s largest trading partner, and South Africa is
the largest destination in Africa for China’s direct investment … By
joining the BRIC countries, South Africa also hopes to become the
gateway for the BRIC countries’ entry into Africa … South Africa has
the ability to promote agendas related to Africa on the international
arena … This is an important factor that makes South Africa valuable
as a BRIC country.”

By getting South Africa on board, China challenges the US to rework its
Africa strategy. How do you patrol the “global commons” in the Indian
Ocean without a grip on the Cape of Good Hope? Interestingly, the
challenge is of diplomatic suppleness with no trace of hard power.
Beijing closely coordinates its foreign policy moves with Moscow and the
initiative to legitimize South Africa as a future global power can be
seen as a joint decision to challenge the US strategies in Africa and
the Indian Ocean.

Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign
Service. His assignments included the Soviet Union, South Korea, Sri
Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey.

http://www.atimes.com/atimes/China/MA04Ad02.html

Another insightful analysis...

------------

BRICS Summit: A Paradigm Shift? – Analysis

Written by: IPCS
April 11, 2011

Bookmark and Share

By Swaran Singh

This week, China is hosting two back-to-back summits of emerging economies. These summits seem pregnant with implications that go far beyond eloquent speeches and photo-opportunities. On a closer look, they promise to provide one more definitive push to the world that now has talks of Bohao instead of Devos and sees the emerging G5 (called BRICS) replacing the overstretched G7 (industrialized countries).

This paradigm shift has begun thanks to the activism of emerging powers groupings like BRICS, IBSA and BASIC; which seek a greater share in redeeming the world from impending global crises like climate change and economic slowdown. Unlike other emerging powers’ groups, BRIC is also expanding its membership. But more than adding new members like South Africa, BRICS is fast transforming this so-called ‘economic club’ into a far more political entity; more than its leaders are willing to admit.

It was in 2001 that Goldman Sachs executive Jim O’Neill coined the acronym BRIC (Brazil, Russia, India and China) to describe the group of countries that were emerging as the leading economic powerhouses of the 21st century. His analyses were based on the growth prospects of these economies. In subsequent years, given several unforeseen trends, his economic projections were to advance several of his original predictions. Jim’s successive report of 2003 advanced the dates by when these BRIC economies would be overtaking several of the conventional post-industrial revolution sheriffs of the world, recasting the world economy and economic discourses.

The significance of this third summit in China this week lies in BRICS moving much beyond what Jim O’Neill had outlined. Even though it remains fundamentally an economic grouping, the entry of South Africa makes BRICS a global entity. There are a number of other countries like Mexico, Egypt, Turkey, Nigeria, Indonesia, Vietnam and South Korea who are far bigger and faster rising economies, and have expressed an interest in joining the BRIC. However, South Africa seems to better fit the bill as an audible voice from a continent with 54 countries. At the same time, South Africa promises to serve as an effective gateway for BRIC’s trade and investments into these resource-rich African nations.

Jim O’Neill criticized South Africa’s entry into BRIC last week on CNN, calling the country’s influence on global economic trends too small to qualify as a member of his original BRIC paradigm. Instead, he prefers Nigeria. But the politics of Nigeria shadow both its economy as also its acceptability in the international community. Even in South Africa, there have been voices of dissent against the BRIC. African National Congress Youth League leader Julius Malema last week called his country’s entry into BRIC misplaced, making it vulnerable to external forces. This shows that the entry of South Africa into BRIC has more to it than economic credentials.

The fact that BRICS is fast evolving its own life and aspirations is sufficiently discernible today to stand scrutiny. To begin with, this new BRICS need not necessarily fit into the original vision of Jim O’Neill. BRICS today is developing not only an economic but also a huge diplomatic footprint, grafting an influential political club over what had originated as a loose economic acronym, making tentative projections and masquerading as a paradigm.

The fact that this third summit is being hosted back-to-back with the Bohao Forum will further facilitate BRICS’ journey from economics to politics. It will allow BRICS leaders to rub shoulders with their contemporaries who will be attending the Bahao Forum. Going by initial indications, BRICS leaders will be discussing not just economic issues of inclusive growth but also global political scenarios, including the western air-strikes to impose a UN-sanctioned ‘No Fly Zone’ on Libya. We may actually see a firm warning to western countries being issued in their closing statement.

There is already a realization that BRICS failed to coordinate their strategy at the UN Security Council’s recent discussions on imposing a ‘No Fly Zone’ on Libya. This resulted in South Africa supporting the resolution while the other four abstained from voting. Russia, India and China have since continued with their campaign against the western bombing of Libya, insinuating an impending humanitarian crisis. Even Brazil issued a similar statement after President Obama’s visit. South Africa has remained relatively mute on the subject but is likely to be co-opted into an evolving anti-West BRICS consensus on the subject.

What guarantees the success of BRICS’ political incarnation is its strong economic fundamentals and policy coordination. These positive trends in emerging BRICS economies are leaving traditional economic powers lagging behind. At present, for instance, the BRICS account for quite over half of the world’s foreign direct investments, annual economic growth, and nearly half of its global population. As a percentage share of the world’s GDP, their combined GDP is expected to rise from 17 per cent of the world in 2010 to 47 per cent by 2030, if not earlier. An expansion of BRICS to include other members in their New Delhi summit next year promises to further reinforce this paradigm shift.

Swaran Singh
Professor, Diplomacy & Disarmament, CIPOD, JNU
email: drswaransingh@gmail.com


http://www.eurasiareview.com/brics-summit-a-paradigm-shift-analysis-11042011/

Alex Roney, you obviously misunderstand the point of BRICS. It is a *political* 'club', not a purely economic club (which is what O' Neil and people like you seem to think it is and should be). When it comes to political and diplomatic weight on the African continent, SA is undoubtedly king. Nigeria and Egypt are far, far behind in this regard. SA country also punches way above its weight class, even globally, on political issues. O' Neil coined the term but even he didn't foresee it would become a formal association. He has no authority on who should members. And it's the prerogative of those countries who they want to have as part of their association. No amount of bitching and complaining by you or anyone else, O' Neil included, at SA's inclusion, is going to change that. In fact, I think it's hilarious that O' Neil's views have been totally disregarded by BRIC countries.

O'Neil is an economist and sees things through very narrow lenses (big population size = big potential markets = future profits). If he was a political scientist, he would see things very differently and realise that 3 current members of BRIC are Asian (Russia, China, and India), while Europe is represented by Russia. The Americas / Latin America / South America is represented by Brazil, which leaves only Africa without a representative in the 'club'. In this regard, for so many reasons, SA is the leading candidate (Egypt and Nigeria are both disasters happening / waiting to happen, and too politically unstable to merit being a representative / candidate member of the African continent). I think the current problems in Nigeria and Egypt only underline why SA is the most appropriate candidate for the continent.

O'Neil has lost tremendous credibility in my books. A few months ago he was arguing that SA was not appropriate member of BRIC and that Africa is the next BRIC. http://www.ft.com/cms/s/0/6c00e950-b153-11df-b899-00144feabdc0.html#axzz1JEMgA8ua

Now, he's changed his mind and says the Middle East is the next BRIC. http://www.thisislondon.co.uk/standard-business/article-23928954-oneill-tips-arab-world-to-be-next-big-opportunity.do

O' Neil's (lack of) credibility aside, I think you should move past your rants on SA. BRIC is now BRICS. Take a deep breath and live it.

I completely agree and I've been saying this for a long time now. The notion that purely from an economic view their are better candidates to include into the BRIC, I don't think anyone would question that fact. But your right politics has played a role, which is why their is no issue in distinguishing BRIC which O'Neil invented for marketing purposes and BRICS which is a political/economic formation between the nation states themselves. Which is why some forumers shouldn't give themselves a heart attack when many economists (not only O'Neil) use the term BRIC instead of BRICS.

Btw I don't know if it was your or someone else in this thread but I predicted Argentina's GDP would surpass South Africa's and the results from the IMF are in, not that I intend to gloat but I should point out that I was right. :) Not that I think it should now be renamed to BRICA (much sounder options than Argentina) but it illustrates my point that from an economic point of view their are better candidates.

Roney, do you just not read the previous posts out of laziness, or do you not understand them?
There is no point to prove.
Anyone can see that the other economies in the group are bigger, with bigger populations etc.
We dont need it presented in table form to know that.
We have said that countless times before in this discussion.

In the very previous post, you will see they mention that SA competes very well on a corporate level.
Position. Politically. Influence in Africa. The structure of the SA economy.
These and other reasons are why BRICS now exists. All in the group know they can benefit.
And South Africa will certainly benefit.

You can cut and paste a few more tables if you want, but it means nothing to the newly formed BRICS.

Chile also competes very well in the global market and has world beating industries. Is far easier, more transparent and less corrupt to do business than any of the BRIC economies by far. Should they be in as well? The vast differences in markets and economic size goes to the point which many people see that SA clearly doesn't fit.

Your giving yourself an aneurysm over a grouping that is based mostly on prestige than anything of substance. China, India, Russia and Brazil don't all have the same economic and political outlook/interests. This won't be some sort of revolutionary grouping. Just pointing out that SA doesn't belong isn't a big deal, I'll accept it as fact but will take it with a grain of salt about what it "significance".

I completely agree and I've been saying this for a long time now. The notion that purely from an economic view their are better candidates to include into the BRIC, I don't think anyone would question that fact. But your right politics has played a role, which is why their is no issue in distinguishing BRIC which O'Neil invented for marketing purposes and BRICS which is a political/economic formation between the nation states themselves. Which is why some forumers shouldn't give themselves a heart attack when many economists (not only O'Neil) use the term BRIC instead of BRICS.

Btw I don't know if it was your or someone else in this thread but I predicted Argentina's GDP would surpass South Africa's and the results from the IMF are in, not that I intend to gloat but I should point out that I was right. :) Not that I think it should now be renamed to BRICA (much sounder options than Argentina) but it illustrates my point that from an economic point of view their are better candidates.

And you if really understand the difference between an economic-based 'BRIC' and the economic-diplomacy-political 'BRICS', you stop should making yourself a fool over and over again by posting economic indicators and whining about SA's inclusion in the 'club'.

Re: Argentina apparently surpassing SA in GDP, I'm not really sure what your point is if you claim to know the difference between BRIC and BRICS, as outlined above. Argentina's GDP (like Mexico's, Indonesia's, South Korea's, and Turkey's) is COMPLETELY IRRELEVANT to the this topic (SA's inclusion in BRICS). Again, you claim you know the difference, but your posts always suggest otherwise.

Oh, and I'm not sure what your source is, but IMF data for 2010 shows SA's 2010 nominal GDP at $354,414 and Argentina's at $351,015. The US's government's CIA website concurs (World Bank 2010 data has not been released yet). Only GDP PPP shows Argentina higher than SA (and Jim O'Neil himself cites only nominal GDP to argue against SA's inclusion in BRIC, not its PPP GDP).

And you if really understand the difference between an economic-based 'BRIC' and the economic-diplomacy-political 'BRICS', you stop should making yourself a fool over and over again by posting economic indicators and whining about SA's inclusion in the 'club'.

Re: Argentina apparently surpassing SA in GDP, I'm not really sure what your point is if you claim to know the difference between BRIC and BRICS, as outlined above. Argentina's GDP (like Mexico's, Indonesia's, South Korea's, and Turkey's) is COMPLETELY IRRELEVANT to the this topic (SA's inclusion in BRICS). Again, you claim you know the difference, but your posts always suggest otherwise.

Oh, and I'm not sure what your source is, but IMF data for 2010 shows SA's 2010 nominal GDP at $354,414 and Argentina's at $351,015. The US's government's CIA website concurs (World Bank 2010 data has not been released yet). Only GDP PPP shows Argentina higher than SA (and Jim O'Neil himself cites only nominal GDP to argue against SA's inclusion in BRIC, not its PPP GDP).

I don't whine, I give my own opinion. I don't get really upset unlike others when people like O'Neil tell why using his criteria SA isn't included. The ones making a full of themselves are some of the South African posters that need some prestige amidst not a great domestic economic climate. After all people arguing against me are actually saying based on the economics of it SA should be included, which is obviously hogwash when compared to the size of the BRIC nations and other better alternatives.

I brought Argentina up previously since people argued against other countries like Egypt and Nigeria. Argentina has a faster growing economy, lower unemployment and relatively strong growth in the future.

Those stats are outdated. Here from the IMF.

Argentina 370.269 bn
South Africa 357.259 bn

http://www.imf.org/external/datamapper/index.php

South Africa is happy with its inclusion. We are not the ones making fools of ourselves - we were quite content with the situation, with our progress.

But people like you come along and just continuously and unnecessarily bleat that BRICS should not be, according to criteria you have borrowed from Jim, who keeps changing his story.

Chile? Argentina? Why on earth - Brazil is the powerhouse in South America. As Lydon has clearly explained to you - the BRIC countries also had Asia and Europe covered.

They wanted in to Africa - the last frontier - and very very naturally picked South Africa as the way in. It is so simple.
Why can't you understand it - seriously, it baffles me? I mean, how many times can we say that economic size is not relevant here.
If that was what was important to the BRIC countries, maybe they would have included a Mexico or Indonesia.

But plainly its not - and as Lydon said, South Africa wields more international political and corporate clout than even existing BRIC members like Brazil and India.

So please, try and get over it.

Lastly SA has world beating corporate sector, I think that's the other thing that is being overlooked, our JSE and companies listed on it provide foreign investors (BRICS) the best platform to enter the vast African hinterland. When it comes to our corporate sector, we're way too advancd even for BRICS.

I gotta give our foreign affairs props for positioning SA the way they have, a country does not have to be an economic behemoth to be powerful or influential. SA is positioned perfectly take advantage of the imminent booming trade links between BRICS, our aim should not be the biggest economy (which is quite impossible) but to be the BEST BRICS economy with the highest GDP per capita...

BRICS not only on economic cooperation, but political voice of the South: minister

English.news.cn 2011-04-12 10:48:06 FeedbackPrintRSS

by Xinhua writer Shao Haijun

JOHANNESBURG, April 12 (Xinhua) -- South Africa's entry into BRICS, a group of emerging economies, not only provides opportunities for economic development in Africa, but also demonstrates the voice of the South can not be ignored in global politics, a South African minister has said.

"BRIC countries are largely, I say largely, products of our forebears in the Bandung Conference of sole solidarity in 1955, so we are elated to see such South-South solidarity coming up with such economy giants emerging from this," International Relation and Cooperation Minister Maite Nkoana-Mashabane said in a recent interview with Xinhua.

The minister said South Africa was "quite honored and elated" to have been invited to join "this very, very, important global grouping."

South Africa was officially admitted to the BRICS, the acronym for Brazil, Russia, India, China and South Africa, on Dec. 24.

"We believe we belong to BRICS because to complete the grouping they needed a country on the African continent and we thought we were the right candidate," she said.

"Looking at the new global political order unfolding out there, the members of BRIC also thought there was a political space for this country in their grouping -- they knew BRIC would not be complete if it did not have the voice of the most influential country in the South, particularly in Africa," she said.

South Africa is the largest economy in Africa, accounting for about a third of the total gross domestic product in sub-Saharan Africa.

The minister believes that membership in BRICS has offered South Africa huge economic benefits.

"They (BRIC members) offer a tremendous market. They offer huge potential for foreign direct investment, collaboration research in science and technology, particularly in food security and agricultural research, infrastructure development in Africa," the minister said.

Nkoana-Mashabane said she was excited about the role BRICS would play in bringing infrastructure development to the African continent.

"South Africa boasts of the finest financial institutions in the world, which we think is some of the expertise we can share with these other countries. So to address vulnerabilities? Partnerships, partnerships, partnerships," she said.

The minister pointed out that BRICS was no longer just about economic cooperation.

BRICS came at an important time when multi-polarity in global politics was almost in shape, she said, noting that South Africa saw a lot of opportunities the emerging countries could seize on the reforms of the United Nations and the international financial institutions.

She believed that BRICS could guarantee that the voices of emerging economies be heard.

Nkoana-Mashabane is going to accompany South African President Jacob Zuma to the third BRICS summit in the southern Chinese city of Sanya in mid-April. The first BRIC summit took place in June 2009.

"BRICS members are still talking about the overall and overarching vision. South Africa believes that we are there at the right time to make a kind of influence and make sure that BRICS doesn't just focus on big governments, big economies, but also looks at softer issues on how to make sure that ordinary people benefit and can also take ownership of BRICS," she said.

BRICS countries should also tackle poverty and underdevelopment, she said.

The minister said South Africa had high expectations toward the upcoming BRICS summit.

South Africa is happy with its inclusion. We are not the ones making fools of ourselves - we were quite content with the situation, with our progress.

But people like you come along and just continuously and unnecessarily bleat that BRICS should not be, according to criteria you have borrowed from Jim, who keeps changing his story.

Chile? Argentina? Why on earth - Brazil is the powerhouse in South America. As Lydon has clearly explained to you - the BRIC countries also had Asia and Europe covered.

They wanted in to Africa - the last frontier - and very very naturally picked South Africa as the way in. It is so simple.
Why can't you understand it - seriously, it baffles me? I mean, how many times can we say that economic size is not relevant here.
If that was what was important to the BRIC countries, maybe they would have included a Mexico or Indonesia.

But plainly its not - and as Lydon said, South Africa wields more international political and corporate clout than even existing BRIC members like Brazil and India.

So please, try and get over it.

Oh okay. :lol:

So what your saying is if South Africa wasn't in Africa it wouldn't have been chosen, but it was in order to fill some geographic representation, because based on other merits other countries fit the bill? Yeah I agree with that.

Geography has something to do with it, yes.
What are you, stupid?
The geographical location of South Africa is a plus for the BRIC countries, of course, given they want a launch pad into Africa.
So what have you got a little laughing emoticon for, you tool?

You need to read properly, or at least try and interpret what you read more fully, OK?

All I said was IF ECONOMIC SIZE was the ONLY CRITERIA, maybe some other nations could have been chosen to join the group.

It is not the only criteria, at all, as anyone who can read should be able to deduce from the numerous articles and news items on the subject.

Only South Africa 'fit the bill', so you will just have to suck it up.

I don't mind engaging with individuals who get the subject matter. However, I've come to realise that Alex Roney doesn't. When you start citing GDP figures of a country like Argentina, which is not renowned as a world-leader of anything, let alone a regional leader (and cannot offer anything to existing BRIC countries), on a BRICS forum, as criticism for Africa's leading country's inclusion in a political/economic association made up of the world most important emerging countries, then you know the writing is on the wall for the citer.

People who are either ignorant, stirrers, trolls, ignorant, or egotistical and miffed (because their world view has been completely disregarded by the countries that matter on the issue), are not engagable or worth responding to.

What we already know, but just to hammer the nail home...


'Size doesn't matter when you're a Bric'
Apr 11 2011 13:47

Johannesburg - South Africa is "not too small" to be a member of the Brics (Brazil, Russia, India, China and lately South Africa) grouping.

This is according to Dr Martyn Davies, CEO of consultancy Frontier Advisory.

"SA has the corporate muscle to compete with other economies in Brics," Davies said.

"We punch above our weight and yes, SA is a relatively small economy but look at the multinational corporations we've spawned such as SABMiller, Anglo American and Sasol. When it comes to multinational corporations, we may even be ahead of other members of the grouping," Davies said.

President Jacob Zuma and other members of the government are to attend the Brics summit in China on April 14.

While warning that SA should not expect too much from the Brics summit, Investment Solutions economist Chris Hart said that the grouping "could evolve into something significant over time for the country".

It would help open links and focus people's minds in terms of business opportunities, he added.

"I strongly believe that our economic relationships with India and Brazil are way below what they could be."

Last week, International Relations Minister Maite Nkoana-Mashabane said SA was "quite honoured and elated" to have been invited to join "this very, very, important global grouping".

"We believe we belong in Brics because to complete the grouping they needed a country on the African continent, and we thought we were the right candidate."

Oh okay. :lol:

So what your saying is if South Africa wasn't in Africa it wouldn't have been chosen, but it was in order to fill some geographic representation, because based on other merits other countries fit the bill? Yeah I agree with that.

Ever heard of the phrase Geo-Politics?

Brics nations target closer trade links

BILL SMITH BEIJING, CHINA
Apr 13 2011 15:37

Trade and finance officials from five major developing nations, including South Africa, on Wednesday pledged closer cooperation and agreed to set up a liaison group to examine ways to expand economic links.

"This consensus indicates a concrete step in institutional building of deepened business cooperation of the Brics countries," China's Minister of Commerce Chen Deming said after the talks between officials from Brazil, Russia, India, China and South Africa in the southern resort of Sanya.

Chen, who chaired Wednesday's talks, said the liaison group would analyse economic and trade cooperation between the five nations and draft a framework for expansion.

The bloc would also draft measures to expand its cooperation with other developing countries, state media quoted him as saying.

The five trade ministers agreed that the global economy was in recovery after the 2008 financial crisis, and said BRICS nations also faced the challenges of inflation, asset bubbles and over-heated economies.

Chen said the ministers discussed how to safeguard the interests of developing nations in multilateral cooperation and pledged to oppose trade protectionism.

Speaking at a joint conference with Chen and the other three ministers, Indian Minister of Commerce and Industry Anand Sharma urged the bloc to strengthen coordination in agriculture, food safety and high-end manufacturing.

He also said Brics should play a greater role in the planned reforms of the World Bank, the International Monetary Fund and other international financial institutions.

Leaders of the five nations are scheduled to meet on Thursday in Sanya and issue a closing statement to summarise their consensus on the "global economy, international financial issues and developmental affairs," China's Foreign Ministry said.

The Brics leaders were also expected to sign an inter-bank agreement to allow their nations to offer credit or grants to each other in their own currencies instead of US dollars. -- Sapa-dpa


http://mg.co.za/article/2011-04-13-brics-nations-target-closer-trade-links

I don't mind engaging with individuals who get the subject matter. However, I've come to realise that Alex Roney doesn't. When you start citing GDP figures of a country like Argentina, which is not renowned as a world-leader of anything, let alone a regional leader (and cannot offer anything to existing BRIC countries), on a BRICS forum, as criticism for Africa's leading country's inclusion in a political/economic association made up of the world most important emerging countries, then you know the writing is on the wall for the citer.

People who are either ignorant, stirrers, trolls, ignorant, or egotistical and miffed (because their world view has been completely disregarded by the countries that matter on the issue), are not engagable or worth responding to.

And then I'm labelled ignorant because I don't think South Africa is a major global power whose economy isn't booming and whose social indicators in many respects is not that much different than India's. So because I think other countries like Indonesia or Turkey provide far greater influence in a economic or geopolitical ring I'm ignorant.

No, you keep shooting yourself in the foot by saying silly, bitter little things like you are 'labelled ignorant because I don't think South Africa is a major global power'.

None of us think, or have said, that South Africa is major global power, OK? Stop being so sulky.

Remember, you are here in the SA forum ranting that SA should not be this and that, showing us little tables to try and prove how ordinary we are...for what? If you were in our shoes, wouldn't you think it smacks of jealosy, or some agenda?

I mean, what have we done that is so bad? We already had Ibsa, our little club with Brazil and India, for a few years. We worked well together. China is expanding its interests in Africa, and was in a club with India and Brazil, South Africa wants to expand trade with China/India etc.
South Africa is the most advanced economy in Africa, with the most international companies, the most investment and influence in Africa.
And there you go - quite a natural next step to include South Africa in the new club.

What is all this denial and hating about? They are currently all at the BRICS summit, its a done deal, its over. Move on, bru...

As I said in a much earlier post, the end of the dollar as the world's reserve currency is nigh. I'm gonna put my head on the block, we will see Rand-Dollar exchange rate of R4/$1 by 2020, anything can happen of course SA could collapse and we could see R5000/$1 too but I think the bias is toward strengthening.

http://www.fin24.com/Economy/Brics-take-aim-at-dollar-20110414

Sanya, China - The five Brics nations took another step towards cementing their global influence on Thursday, calling for a broad-based international reserve currency system "providing stability and certainty".

In a statement released at a summit on the southern island of Hainan, the leaders of Brazil, Russia, India, China and South Africa said the recent financial crisis had exposed the inadequacies and deficiencies of the current monetary order, which has the dollar as its linchpin.

And now, the world has to listen! How things have changed in such a short space of time...

Only slightly related to Brics, but still great to see:

New undersea data cable planned for SA
Apr 15 2011 06:52
Edward-John Bottomley

Cape Town - Yet another undersea cable, the biggest to date, could bring faster broadband to South Africa.

On Thursday the Brics countries expressed support for the South Atlantic Express (Saex) Cable.

This 12.8 terabit cable is more than double the size of the Wacs cable that will shortly land in South Africa.

Saex will link South Africa with Brazil through Angola. What makes this cable different, apart from its size, is that it offers the shortest route to the US today, which will increase the speed of data transmission.

Undersea cables currently link South Africa with the US through Europe.

According to industry website TechCentral, Saex is managed by a young company, eFive Telecoms, with financial support from the Bank of China and the Industrial Development Corporation. The cable is expected to cost R3bn.

http://www.fin24.com/Companies/ICT/New-undersea-data-cable-planned-for-SA-20110415

Thats what I am talking about!

Seeing that SA IS now part of Bric, would it be ok to close this thread and move on to the other one? The 'should SA be allowed in or not- discussion' is not relevant anymore.

Given the long (and interesting!) history of this one, I think it makes more sense to simply rename it rather than start a new thread. I'll send a note to Mike.

Brics nations moot trade in own currencies
CAPE TOWN, SOUTH AFRICA
Apr 18 2011 06:42

Brics (Brazil, Russia, India, China, South Africa) nations could benefit considerably by trading directly in their own countries, cutting out unstable internationally convertible currencies, Trade and Industry Minister Rob Davies said on Sunday.

Davies said such a system would take out the money lost to the "middle man" in conversion, and protect Brics trading partners from the volatility affecting internationally convertible currencies, notably the dollar.

"First of all the middle man always takes a cut and we are also having to take into account the currency fluctuation that happens along the way," he said after returning from the Brics summit in China.

The proposal is considered one of the most interesting developments at the third Brics summit and could have serious implications for the dollar, but it raises question about how the members would calculate conversion rates

Davies said the countries were not "remotely close" to picking the model for making their currencies inter-convertible.

He stressed that the proposal was part of the emerging market countries' call for greater say in how the world's financial system was run and the debate on which currencies should be in the emergency "basket" of drawing rights managed by the International Monetary Fund.

Davies said monetary policy in the developed world was wreaking havoc on developing economies like South Africa by inflating their currencies as investors went hunting for higher exchange rates.

The summit marked South Africa's debut in the club of fast-growing economies that account for 40% of the world's population.

Davies said South Africa was well aware that in many ways it did not measure up to Brazil, China, India and Russia but had been invited because it served as a gateway to Africa.

He described the meeting a "very successful entry into Brics" and said important bilateral trade issues were discussed, especially with China.

Chinese delegates were sympathetic to South Africa's call for investment in beneficiation, which could have positive implications for the country's export revenue.

At the moment South Africa exports mainly raw mineral materials to China while importing manufactured goods.

Commenting on the Doha Round of tariff negotiations, Davies said it was imperative that the talks continued but addressed obstacles for developing nations, notably agriculture subsidies.

"There must be a next round but it must be a development round." -- Sapa


http://mg.co.za/article/2011-04-18-brics-nations-moot-trade-in-own-currencies

Sipho Ngcobo
24 May 2011 17:33

Why SA deserves to be a BRIC

Don’t tell me I am too small to join the club, which I was invited to argues Sipho Ngcobo.

JOHANNESBURG - It is very surprising how so many cynics, critics and short-sighted intellectual snobs miss the point completely when they analyse South Africa’s membership of the BRICS.

Of course, the BRICS comprise Brazil, Russia, India, China and South Africa – which together are worth an estimated $12trn and growing.

This is the club of the most influential developing economies in the world, with the potential to overtake the United States, which is currently sitting at an estimated $15trn net-worth as an economy.

And yet people refuse to put on their appropriate thinking caps when they look at what this truly means for South Africa.

Instead, the debate is more focused on how small an economy South Africa is compared to its BRICS counterparts.

That argument misses the point completely.

You see. South Africa’s invitation by the BRIC (Brazil, Russia, India and China) is recognition of our country’s strategic role on the African continent and its ability to punch above its weight on the global stage when it matters.

The paradigm is shifting. But of course it depends on one’s thinking. The question is: What do you see when you look at South Africa?

The BRIC look at South Africa differently compared to the run-of the-mill intellectual breed, which is only prepared to argue solely on the basis of size. Size can mean absolutely nothing at times.

The phrase “South is the gateway into Africa” is no longer just an empty, meaningless slogan. Africa is touted as the next investment destination. It follows because Africa is the third biggest market after China and its richness in largely unexploited mineral and other natural resources makes our continent that much more strategically important.

Africa is a virgin, if you like. It’s waiting to be processed. With these untapped resources and an estimated 1bn consumers of goods and services, that’s where the world is going to make most money in the future. And the BRICS are salivating. Therefore it is no surprise that they are positioning themselves to benefit more than anyone else.

So, what better way to position themselves than to forge meaningful links with the biggest economy on the continent? That’s one of the main reasons why South Africa was invited to join the BRICS. It was not for any patronising, condescending reasons. There’s no time for that in the modern world. In this new economic exodus into Africa, South Africa will serve as a conduit – a bridge.

That’s why a lot of the companies from the BRIC countries are going to be setting up head-offices in cities like Johannesburg in the not so distant future. In fact it’s already happening. You just have to open your eyes to this reality.

Look at the following examples:

In 2007, the Industrial and Commercial Bank of China bought 20% of South Africa’s Standard Bank for R36bn making it China’s biggest foreign investment to date.

In 2009, China announced that the China-Africa Fund will be head-quartered in Johannesburg.

There are already firm discussions that the Chinese will build South Africa’s high-speed rail link between Durban and Johannesburg.

You see what I am saying?

Look at it this way.

South Africa is now part of a club that’s going to rule the world economically going forward. BRICS are the future, with China being the second biggest economy in the world today.

We have our problems as a nation. But South Africa is steadily but surely making waves on the international stage. The seat on the United Nations’ Security Council is a good example of this. It gives Africa a voice to discuss political and security matters on the biggest international stage. The BRICS membership equally gives Africa the voice on the podium of economic and financial developmental and trade architecture.

We are doing this for ourselves, our children and the future generations. Do you get that?

Don’t tell me I am too small to join the club which is going to rule the world in the future, especially when this club sends a special invitation to me.

Stop obsessing about size.

Size will come.

*Sipho Ngcobo is former deputy editor of Business Report and ex-managing editor of Enterprise Magazine. He was one of the original team members of Business Day when the paper was launched in May 1985. He was a correspondent at international news agency Dow Jones where he reported on markets and companies in the early 1990s. He has also written for such publications as the Sunday Times, the World Paper in Boston and was employed by the New York Times Group in the US between 1989 an 1991.

Write to Sipho Ngcobo: siphon@moneyweb.co.za


http://www.moneyweb.co.za/mw/view/mw/en/page292679?oid=537703&sn=2009+Detail

Brics speak strongly against European IMF leader
PAUL HANDLEY WASHINGTON, UNITED STATES
May 25 2011 06:54

The world's largest emerging economies on Tuesday slammed Europe's push to lock up the International Monetary Fund's (IMF) top job, calling its hold on the position "obsolete".

One day after nominations opened to replace Dominique Strauss-Kahn as managing director, IMF directors from Brazil, Russia, India, China and South Africa -- the so-called Brics economies -- said Europe's longstanding exclusive deal to lead the IMF "undermines the legitimacy of the fund".

They strongly objected to the aggressive push by Europeans since last week to have one of their own to replace Strauss-Kahn, who resigned on Wednesday after being arrested in New York on sexual assault allegations, which he denies.

"We are concerned with public statements made recently by high-level European officials to the effect that the position of managing director should continue to be occupied by a European," they said.

The 2008/09 financial crisis in the United States and Europe showed the need to reform institutions like the IMF "to reflect the growing role of developing countries in the world economy", they said.

"This requires abandoning the obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe."

Last week the IMF said it want to make a choice by the end of June, based on consensus among the 24 executive board directors, or possibly by a vote.

'European consensus'
No formal nominations have been revealed but Mexico's government said it would propose Agustin Carstens, the respected Mexican central bank governor who has extensive experience at the IMF.

However, within days of Strauss-Kahn's May 14 arrest, European officials were already promoting France's Finance Minister Christine Lagarde for the job.

CONTINUES BELOW


In recent days she garnered strong endorsements from the German, British and Dutch finance ministers, as well as New Zealand Prime Minister John Key.

Moreover, earlier on Tuesday the chief French government spokesperson Francois Baroin said even China was ready to back her.

"The Chinese are favourable to the candidacy of Christine Lagarde," Baroin, who is also France's budget minister, told Europe 1 radio.

"What is being drawn up is a European consensus," Baroin said, adding that France did not want "to make any gesture that could be interpreted as a form of contempt for emerging countries nor any sign of arrogance".

Many European leaders believe the deep problems of the European Union, with Greece, Portugal and Ireland in financial crisis, require an IMF chief current on the region's issues.

'Gentlemen's agreement'
Developing country officials accuse the Europeans of trying to ramrod Lagarde through and scare off possible challengers.

For years developing countries have complained about the "gentlemen's agreement" dating to the founding of the IMF at the end of World War II that keeps a European running the fund while an American leads its sister institution, the World Bank.

The five Brics directors said that for credibility and legitimacy, the managing director should be selected "after broad consultation with the membership" and decided based on "the most competent person ... regardless of his or her nationality".

They recalled then-Eurogroup president Jean-Claude Juncker pledging, at the time of French politician Strauss-Kahn's selection in 2007, that "the next managing director will certainly not be a European".

But they did not name any possible candidates, and so far, developing countries have not coalesced around any one person.

"It's a sign of the times that five directors are issuing a statement like this," said Daniel Bradlow, a law professor and expert in international financial institutions at American University in Washington.

"They're not endorsing anyone, nor are they agreeing on a single candidate, which is unfortunate, but they have strong words against Europe."

Carstens, the most prominent developing country candidate with his hat in the ring, told Bloomberg television that he would only have a chance for the job if the process is transparent, allowing the IMF's 187 members "to compare resumes, compare experiences, hear the candidates and make up their minds".

"If the process is done in that way, I have a chance," he said.

On Wednesday attention will turn to Lagarde, expected to give a press conference ahead of the Thursday-Friday summit of the G8 countries in Deauville, France.

On Friday a European Union insider told Agence France-Presse that her name would be advanced during the G8 meeting, calling her a "shoo-in" as Europe's candidate. -- AFP

http://mg.co.za/article/2011-05-25-brics-speak-strongly-against-european-imf-leader

China punts closer SA ties

Cape Town - China wants to strengthen its friendship with South Africa and the whole of the continent, China's top legislator Wu Bangguo told President Jacob Zuma at the start of talks in Cape Town on Wednesday.

"The friendship between China and South Africa and Africa as a whole is indeed on a very solid foundation," Wu said after greeting Zuma at Tuynhuys.

"We are both very enthusiastic about growing our bilateral relationship ... It is one of the most dynamic bilateral relationships for both sides."

Wu said Beijing believed that under Zuma's leadership "South Africa will make even greater progress" and congratulated him on the ANC's performance in last week's local government elections.

Wu, the chairperson of China's National People's Congress, met with Zuma after addressing parliament. He is on a four-day visit to South Africa at the invitation of his local counterpart, speaker Max Sisulu.

After three days in Cape Town, he was due to travel to Johannesburg to meet with local business leaders before a dinner with senior officials from the department of trade and industry.

China became South Africa's single largest trading partner in 2008 and the government hopes that the further strengthening of ties with the Asian manufacturing giant will help boost South Africa's economic growth.

Zuma visited China with a delegation of 13 ministers last year and sought to encourage Beijing to invest in infrastructure in South Africa.
page1

SA well placed to attract investment
Monday, 06 June 2011

South Africa's "stability and predictability" of its institutions, free press and transparent Constitution and government, gives it an advantage over many developing countries to attract investment.

However, government must continue in its efforts to stamp out corruption, which does not bode well for investment, according to Goldman Sachs International Managing Director, Colin Coleman.

Coleman addressed the International Entrepreneurship and Investment Conference last week on the challenges and opportunities facing African countries in terms of economic development. Africa, despite challenges like infrastructure shortages, political instability and health issues, is attracting foreign investment.

According to Coleman, Brazilian investors are active in West African countries and the Chinese are involved in economic projects all over Africa. India and some large South African companies are also making their presence felt in African countries to boost economic growth.

Coleman drew attention to the positive economic impact by South African companies MTN, Standard Bank and Shoprite in other parts of the continent. He said for now, South Africa was one of the leading economies on the continent, given its admission into BRICS and other important international institutions.

CEO of BJM Securities, Andile Mazwai, added that South Africa, in comparison to other emerging markets, is an easier place to conduct business. He also warned however that corruption, health and safety issues must be dealt with immediately.

Meanwhile, South African leaders President Jacob Zuma, Minister in the Presidency in charge of the National Planning Commission, Trevor Manuel, and Finance Minister Pravin Gordhan were applauded for their efforts to push the agenda of Africa as a whole on the world economic stage.

The significance of the African Free Trade Area in relation to BRICS. Obviously the BRIC countries knew this was on the cards prior to the invite, and they could see how SA membership in BRIC could work to their benefit and would also enhance geographical representation in the grouping...

------------

African mega-treaty 'to funnel free-trade fortunes into SA'
CAPE TOWN, SOUTH AFRICA
Jun 13 2011 19:48

The planned creation of a 26-nation African Tripartite Free Trade Area (FTA) will draw industrial investment to South Africa by making it a springboard for low-duty access to other parts of the continent, trade and industry director general Lionel October said on Monday.

"From the private sector side, two of the big markets in this FTA [are] Egypt and Kenya and if they can then get duty-free access into those markets in north and central Africa then South Africa becomes a production base," he told a media briefing in Cape Town.

"Currently, [most of the exporters coming from Europe or Asia] pay big duties on that and that (benefit) kicks in then immediately because of the bigger volumes. We begin to crack the numbers ... so I think the benefits from investment [kick] in immediately because of the prospects of a big market."

October said the announcement this weekend of the establishment of the free trade zone by 2013 would "absolutely" enhance South Africa's weight within the Brazil, Russia, India, China and South Africa (BRICS) group of emerging markets.

"We will no longer be a pimple."

The proposed free trade zone will merge the three regional blocs covering southern, central and eastern Africa.

These are the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (Comesa), and the East African Community (EAC), which have a combined population of 580-million people.

Global development
Trade and Industry Minister Rob Davies said the move to cut barriers in an area stretching from Cape Town to Cairo made sense in terms of global development trends.

He pointed to the "very significant contribution" their big internal markets made to the development of India and China.

"A free trade area across big areas ... is very much compatible with what is needed at this stage of the development of the world economy which we find ourselves in. It is very compatible with what successful developing countries are doing.

"Having large and significant internal markets and the development of those are a significant requirement of their growth processes."

Davies said integration would enhance Africa's chances of capitalising on the two drivers of its faster growth rates -- the mineral boom and the growth in the domestic market.

"As individual countries, the prospects of that are limited. As regions, the process starts to crack the numbers that make some significant sense."

He said that merely lowering tariffs would not give regional trade enough of a boost.

Inter-regional trade
The free trade deal was, therefore, only one leg of a complex process to promote inter-regional trade, which currently accounts for only 10% of total African trade, and to integrate development within Africa.

Commitments made at the weekend's summit of leaders of SADC, EAC, and Comesa also saw an agreement to jointly develop infrastructure and to co-operate on industrial development.

Also part of negotiations are plans to facilitate the movement of business people between African countries, which Davies said was hampered by regulations aimed at deterring crime and illegal immigration.

"We need to make that much easier, so that when people come to trade, to invest that is much easier. That's what has been agreed upon," he said.

Davies said tariff liberalisation would be "substantial" and might be phased in.

Observiing local customs
He dismissed concerns that it could starve some smaller African nations of one of their main sources of fiscal revenue.

"Many countries are trying to reduce their reliance on customs duties. Custom duties are an incredibly volatile source of revenue, that is the problem. If trade takes a dip, the customs revenue takes a huge dip.

"That is the problem that is confronting some of our neighbours and their fiscal situations, those that are the most dependent on [Southern African Customs Union (Sacu)] revenue have been the most affected by the fact that there was a very significant drop in Sacu revenue during the recession.

"I haven't heard anybody raise this as an objection to the FTA." -- Sapa


http://mg.co.za/article/2011-06-13-freetrade-africa-megatreaty-will-funnel-fortunes-into-sa

i've been waiting for this:

SA snubbed by Bric investors


Johannesburg - Brazil, Russia, India, China and the Middle Eastern countries all prefer to invest in African countries other than South Africa.

The so-called Brics countries regard investments in other African countries as more viable and sustainable than in South Africa. Countries that the Brics countries favour as investment destinations above South Africa include Kenya, Tanzania, Mozambique and Botswana.

The catalogue of problems scaring potential investors in South Africa includes irresponsible pronouncements on nationalisation.

Robert Appelbaum, head of trade with India at Webber Wentzel, said an Indian strategist hurriedly left for home last week – having been persuaded with difficulty to return later if nationalisation is not on the agenda.

For 20 years Appelbaum has been involved in trade relations between South Africa and India, and he said India is increasingly aware of the benefits of investing in Africa.

But South Africa is no longer the preferred gateway to Africa, he said.

The eyes of the world are on South Africa and pronouncements on nationalisation are a big problem.

South Africa does not appear to realise that countries south of the Sahara are strong competitors as investment destinations, he added.

In what was described as the “second scramble for Africa” at the African Union summit in Ethiopia earlier this month, South Africa was overlooked as an investment destination for several reasons.

Appelbaum said if South Africa wanted to attract more investments from India and its Brics partners it would rapidly have to upgrade its ports and rail lines.

Indian companies are descending on the Waterberg coal deposits, and the big question is how to export the coal.

Unfortunately for South Africa, the export route will be via Mozambique rather than Richards Bay.

Appelbaum said Mozambique is establishing active rail corridors and is making huge investments to attract exports to its ports.

It's critical for South Africa to upgrade its ports and rail systems. They are currently inadequate and hampering export.

Prospective investors from India and other Brics countries are also daunted by the high cost of labour in South Africa relative to costs in their own countries. They find insufficient incentives to establish their companies here and to train the local population in the necessary skills.

Foreign investors find it a problem that the requisite skills are not available here and that incentives to train staff are scarce and complicated.

Black economic empowerment also frightens off foreign investors. Appelbaum said companies regard it as a big expense because funding is scarce and empowerment partners do not themselves come with the required finance.

He said the companies are not unwilling to comply with empowerment requirements, but they regard them as an additional expense which handicaps investment.

Safiyya Patel, a partner for mergers and acquisitions at Webber Wentzel, said a pact between South Africa and India was necessary to handle legal decisions. India does not currently accept decisions by South African courts and it can take up to 15 years for legal disputes to be resolved.

Appelbaum said that as a consequence South African companies invest in India through intermediaries in countries that do have legal agreements with South Africa, and the converse.

Foreign investment could help to start solving the unemployment problem. Appelbaum said Indian companies had already created thousands of jobs in this country.

The investments by the Mahindra and Tata automobile companies have led to Indian component manufacturers taking an interest in investing here. But the lack of incentives puts them off.

http://www.fin24.com/Economy/SA-snubbed-by-Bric-investors-20110623

^^Numbers please, does this guy have numbers to substantiate? FDI trends that sort of thing? I think it is unrealistic to expect every single commercial deal in Africa to involve South Africa, FDI into Africa must be encouraged, SA's comparative advantage is structural....

It's media horseshit again.

They say India is not interested in SA, then they say Indian investors are scrambling for our coal deposits!

He says we need to uprade ports and rail - well HELLO, WTF does he think we are doing? Does he know about Durban, about Coega, about Transnets restructure, about all the other upgrades. Fuck me, a fleet of brand new heavy locomotives arrived here just last month.

The title of this article is just bollocks.

And here, an article from a few hours ago to prove my point...

Targeted efforts have yielded FDI pipeline worth R115bn - Davies


Cape Town: Trade and Industry Minister Dr Rob Davies says that a three-year investment pipeline worth R115-billion has arisen as a result of government’s targeted efforts to promote foreign direct investment (FDI) from China, India, Russia, Brazil, Japan, Spain, Germany, France, the UK, the US and the Middle East. He told lawmakers on Wednesday that FDI valued at R28-billion had already been secured, which had the potential to create 13 000 jobs.



He provided no specifics, but noted that during 2010/11, automotive assemblers and component suppliers announced investment commitments of R13-billion. “Of particular significance is the expansion in local component sourcing by the original-equipment manufactures, which is important because most of the job creation in the automotive sector will emerge from smaller companies producing components,” he said.



The Minister also reported that the initial sectors from which departments and State-owned enterprises would have to buy locally produced goods and services would be “designated” by the time the reformulated preferential procurement regulations came into effect on December 7, 2011.



The regulations, which were published by Finance Minister Pravin Gordhan in the Government Gazette of June 6, has been revised partly to support “localisation”, as well as to ensure better alignment with South Africa’s black economic-empowerment codes of good practice. They were also broadened to include State-owned enterprises and agencies under the ambit of government’s overall procurement rules.



The DTI was in the process of identifying a number of industries that were considered critical and/or strategic. Once officially designated, government tenders would stipulate that only locally manufactured products could be considered. Alternatively, the tenders would state that only locally manufactured products with a prescribed minimum threshold for local content could be procured.



Davies said that, by the time the regulations came into effect, his department would be ready with a number of designations to ensure that as the country’s “infrastructure investment programmes advance, they will act as a catalyst to local industrial development”.



Work was also being done in a bid to leverage more from the balance sheet of the Industrial Development Corporation, which Davies said had already unlocked between R70-billion and R100-billion in finance for new initiatives.



“We anticipate finalising our work to identify a new model of developmental financing for industrial development that we hope can result in an increasing quantum of funding being available at cheaper rates.”

I read that article. Its very contradictive indeed. Much is being done to upgrade port & rail infrastructure, as you mentioned. Than again, why should we do that- to get our minerals out of the country to satisfy their hunger and needs? India is the one that should get its ínfrastructure in order. Last time I recall, its Acsa that modernised Mumbai airport- India's gateway. They need us more than the other way.

Having said that, SA's lame duck president should really show leadership and ruk daai Malema ding in sy bek. 'That thing is harming the country big time.

That is true - even though Malema is not a minister, and thus has no real political power - his comments get reported far and wide, and leapt upon by the overseas ex-saffer haters as if they are actual policy!

Every time I speak to one of my buddies overseas, they are keen to mention Malema in that good old 'told you so' tone they have been using for 10 years already.

But I think, as I have said before, that Malema is about to come short big time. His problem is, he is pissing off a lot of different groups - from the ANC top brass, to the whites in general, to cosatu.

He obviously is no student of history - you never fight a war on two (or more) fronts..!

I laughed when the article got to the ports and rail part myself.

You wonder what people like this Appelbaum guy are trying to do exactly - strikes me as a bit Oneill-esque with his comments.

'Irresponsible pronouncements on Nationalisation' he says - but the government policy is quite clear, the favour free-market ideology - and the govt has made no such pronouncements.

They can't stop random and various people shouting their opinions, however - but as the Anglo chairman said yesterday (in response to this storm in a teacup) - they have spoken to government, and they are commited to SA because of the governments strong free market policies...

No one is nationalising these mines, I promise you - there are far too many big hitters involved.

Brics bourses reveal cross-listing plan
Oct 13 2011 06:50

Sapa

Johannesburg - Stock exchanges from Brazil, Russia, India, Hong Kong and South Africa on Wednesday unveiled a cross-listing agreement for derivatives in a bid to increase economic partnerships, officials said.


The BM&F BOVESPA from Brazil, MICEX from Russia, Hong Kong Exchanges and Clearing Limited (HKEx) and South Africa's JSE would start the product-sharing by June 2012.


The National Stock Exchange of India (NSE) and the BSE will join after meeting the final requirements in their country. The exchanges have a combined market capitalisation of $9 trillion, they said in a joint statement.


Collectively, the five major emerging economies are known as Brics. The five countries this year have taken a series of steps toward closer economic and diplomatic ties.

"We are all looking for ways to grow, to expand our core market. Brics is a really big commodity play," said HKEx chief executive Charles Li in a statement.


The decision was announced at the World Federation of Exchanges (WFE) in Johannesburg.

Under the deal, the exchanges will cross-list benchmark equity index derivatives. Later they plan to develop new products to track the exchanges.


The bourses have 9 481 companies listed on them and accounted for 18% of global exchange-listed derivative contracts traded by volume as of June 2011.

"The Brics exchanges alliance holds great promise, as it will create avenues for Indian investors to diversify and expand into other emerging markets," said BSE head Madhu Kannan.


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