South Africa’s prospects for growth and development will depend increasingly on diversifying and strengthening of economic links with countries in the south, said Trade and Industry Minister Rob Davies.
Speaking at the expert group meeting at Jakarta, Indonesia, Davies said that BRICS [Brazil, Russia, India, China and South Africa] was an important voice for emerging economies, adding that while South Africa’s economic links with traditional trading partners remained important, prospects for growth and development will depend on diversifying and strengthening economic links with economies of the south, including Indonesia.
“The expansion of South Africa’s trade and direct investment with the countries of the South, notably the BRIC countries, continues apace, with China and India at the forefront,” he told the meeting.
Indonesia is the largest economy in South-east Asia, with gross domestic product (GDP) of around US$1-trillion.
According to the Department of Trade and Industry, trade between South Africa and Indonesia grew between 2007 and 2011, with SA ranking 23rd as a destination for Indonesian exports, and Indonesia ranking 26th for imports from SA.
South Africa ‘looking to the south’
The share of the European Union in South Africa’s total trade has declined from 36% in 2005 to 26.5% in 2011. “By contrast, the share of the BRIC countries in South Africa’s total trade has increased from 10% in 2005 to 18.6% in 2011,” he said.
South Africa, said Davies has a direct interest in extending BRICS cooperation to support Africa’s economic development agenda. Davies co-chaired the two countries’ Joint Trade Committee (JTC) with his Indonesian counterpart Gita Wirjawan.
Supporting Africa’s development agenda
Davies said South Africa had a direct interest in extending BRICS cooperation to support Africa’s development agenda, particularly by “increasing financial aid to build infrastructure and industrial capacity, and increasing imports of value-added manufactured products from the continent.
“The abundant natural resources of Africa, the growing consumer power of Africa’s emerging middle class, and high growth rates offer an opportunity to build a more sustainable and mutually beneficial relationship with Africa in the next decades,” said Davies.
The South African government is of the view that the BRICS led Development Bank that is under discussion should mobilise resources for infrastructure and sustainable development projects in BRICS and other Emerging Economies and Developing Countries (EMDC).
South Africa will host the 5th BRICS Summit in March 2013 with preparations of the summit being already at an advanced stage. South Africa was admitted to the economic bloc of emerging markets in 2010.
Among the key decisions expected to come out of the South African summit include the formation of a BRICS Development Bank. The plan is a subject of discussion among BRICS leaders who see it as a possible alternative financial institution to the International Monetary Fund and World Bank.
The aim behind the creation of a BRICS bank is to have a development-focused finance institution to support and drive commerce between the BRICS economies.