Thursday, October 22, 2009

Bric is continent's saviour - experts

The group's trade with Africa has ballooned, led by China

October 15, 2009 - By Ethel Hazelhurst, for Business Report

Africa's links with Bric countries - Brazil, Russia, India and China - could help end the continent's era of marginalisation.

Simon Freemantle, a Standard Bank economist, yesterday advised African governments to make the most of their relationships with these emerging economies.

And he said that the benefits of the relationships were not one-sided, but were rooted in "mutual advantage".

At a presentation on "Bric in Africa", he said much of the impetus - trade partnerships and diplomatic initiatives - so far had come from the Bric countries, which had increased their ties with Africa at a "staggering" speed.

Freemantle said: "There needs to be more proactivity from the African side."

Regional partners such as the Southern African Development Community (SADC) should be "galvanised to take advantage" of the opportunities created by the new relationships.

He urged countries to develop common regional policy frameworks to guide investment and trade; and also to communicate their intentions to their own "stakeholders".

And he warned of the dangers of a "short-sighted nationalistic race to the bottom which would do little for Africa".

Standard Bank economist Jeremy Stevens said President Jacob Zuma's recent initiative in Brazil was an indication that South Africa was being proactive about South-South relationships. Zuma tied up a deal between the Southern African Customs Union and the Mercosur trading region, which includes Brazil, to liberalise trade for about 1 000 tariff-item lines.

Stevens described Zuma's initiative as "an indication of intent" and said "it shows there is a realisation of the importance of Brazil in the South-South axis".

Freemantle and Stevens said the Brics were reversing Africa's marginalised position in world trade - after its share had shrunk from 4.6 percent in 1983 to 1.7 percent in 2002. The continent had regained some lost ground, raising the share to 3 percent by last year.

But they pointed out this was "disproportionately small considering that Africa comprises about 15 percent of the world's population".

Their research shows Bric-Africa trade has ballooned, led by China.

Africa's trade with Bric grew from 4.6 percent of its total external trade in 1993 to just more than 19 percent last year, which produced a $20.2 billion (R147bn) trade surplus for Africa.

China-Africa trade has risen from $3.5bn in 1990 to more than $100bn last year, which represented about two-thirds of Africa's total Bric trade.

China figures among the top five export destinations for 20 African countries, while 32 list China among their top five sources of imports.

Bric countries are also major investors in Africa, led by China which has invested $28.7bn between 2003 and this year. India is the next biggest investor and, unlike China, the foreign direct investment came largely from multinationals that had invested in more than 130 projects worth on average $192 million each.

It is followed by Brazil, with $10bn and Russia's $9.3bn.