Why is South Africa a BRIC?

South Africa is set to participate in the 4th BRICS summit in New Delhi, its second, since its membership last year. What does this mean for the newest member of this grouping? Alisha Pinto, Researcher at Gateway House, interviewed Renu Modi, former director of Centre for African Studies, University of Mumbai, on South Africa and its role in the BRICS.

Q: In 2010, South Africa officially became a member of BRICS. Compared with the other BRICS countries, South Africa’s size, population, and economy are quite small. Do you think that a country like Nigeria would be more representative of sub-Saharan Africa? What value does South Africa add to BRICS?

BRICS is not decisively about a politico-economic grouping of comparable economic-demographic stature, though that is certainly one of the determining factors in deciding the membership. South Africa’s entry into the BRICs on December 24, 2010 was a Christmas gift to itself. Even though it has a much smaller population and economy as compared to Nigeria, other factors worked in its favour – its vast natural resources such as gold, diamonds and platinum, its excellent infrastructure, its established corporate footprints, a culture of innovation, easy access to finance for business, a stable macro and micro financial climate, an advanced banking system, and functioning regulatory frameworks.

South Africa is already the voice of the continent at various international forums. It is poised to serve as a base as well as a gateway for investment from the BRICS countries to the vast market of a billion Africans.

But Nigeria has a place too: If we take into account the fluid nature of international politics and constellations like BRICS or Nigeria’s ‘Vision 20: 2020’, (a development goal designed in 2010 to take the country to the league of the top 20 economies of the world by 2020), we might have ‘BRINCS,’ and Nigeria might step in to be the western gateway to the continent!

To what extent does South Africa actually represent the better-developed parts of sub-Saharan Africa?

Africa, the second largest and the most populous continent after Asia, has 54 nations with diverse history and growth trajectories. South Africa is different from the other BRICS member states; it has a unique history and a different economic trajectory. It does not literally ‘represent’ the other African countries but it does share the concerns of other states of sub-Saharan Africa like democracy, countering violence, dealing with issues of law and order, economic inequality, a socially and culturally diverse populace, poverty and unemployment.

China pushed for South Africa to join BRICS in December 2010. In October 2011, South Africa denied the Dalai Lama a visa to attend the birthday celebrations of fellow Nobel Laureate, Desmond Tutu. Was that a trade-off?

Though unsaid, the China factor is clearly evident in South Africa’s entry into the BRICS. China is definitely the most dominant constituent of the BRICS. It has massive financial stakes in South Africa, mainly in banking, infrastructure, mining, transport and renewable energy. For example, the Industrial Commercial Bank of China (ICBC) has a massive investment of 237.6 billion rupees ($4.7 billion), a 20% stake, in South Africa’s Standard Bank.

China is South Africa’s largest trading partner with a surplus in favour of China and the infusion of the Chinese yuan has kept South Africa afloat during the economic recession. You can see why China has a place of importance in South Africa’s foreign policy.

The Dalai Lama last visited South Africa in 1996, a decade and a half ago, to meet Nelson Mandela. The denial of a visa to the Dalai Lama to attend Desmond Tutu’s 80^th birthday celebrations was not the first time he was denied a visa. In 2009, he was refused a visa on the pretext that his visit would distract from the 2010 World Cup preparations. The Dalai Lama is a vocal critic of China’s denial of the right to self-determination and of human rights to the Tibetans. The recent visa denial was criticized locally; COSATU, the Coalition of South African Trade Unions, termed this decision an “exchange of morality for yuans.”

This definitely shows that South Africa prioritizes its economic relations with China and supports the ‘one China’ stance that rejects political independence of Tibet. The Zuma administration is more explicit about preserving South Africa’s enhanced engagement with China, while in the Mbeki period, the China factor was more understated.

South Africa is a part of the BASIC group comprising emerging countries opposed to Western pressure to undertake legal emission obligations. Given that South Africa is a polluter similar to mining countries like Australia and Canada, will it be able to maintain its position with the BRICS at the climate change negotiations?

There is an unstated link between the debates on climate change and energy security of a country. South Africa is Africa’s foremost polluter and reportedly its mining sector, mainly coal, contributes about 40% of the total greenhouse gas emissions on the continent. South Africa’s excessive use of coal for power generation and production of petrol by leading public sector companies questioned its position as a genuine broker at the December 2011, UNFCCC climate change meeting.

As a part of the BASIC countries, South Africa stood firm on the issue that developed countries should bear the burden of climate change, lead the emission cuts and provide funds to the proposed Green Climate Fund and technology to developing countries for better adaptation and mitigation of climate change. All countries, including South Africa, have been talking about the use of renewable sources of energy such as solar, wind and water power but this has not been put into practice. For a genuine commitment to the issue, there has to be an acceptance of the principle of Common but Differentiated Responsibility (CBDR) and a strong and legally binding compliance procedure in future climate change negotiations.

Where does South Africa stand in the Doha Rounds of the WTO negotiations? Has it been supporting the emerging economies at the past meetings?

At the recent Davos meeting in January 2012, South Africa stood alongside Brazil, India and China to issue a common declaration and reaffirmation that Doha Development Rounds must be based on the principle of “reciprocity” requiring proportional commitments between developing and developed countries. At the core of the agreements would be the interest of the poor people that can be read as the ‘national interests’ in their respective home contexts. So certainly, South Africa supports the stance of the developing countries.

At the Doha negotiations, South Africa and the other emerging markets of the global South are by and large on common grounds. However, they do differ in negotiations on issues of market access and the need to protect their domestic agricultural and industrial sector. Here they use defensive strategies against each other, as exemplified by Brazil and South Africa, which guard against any ‘injury’ caused to their ‘sensitive products’. These countries use import prices and quantity triggers to protect livelihoods at home. Brazil challenged the imposition of high tariffs on its poultry exports, amounting to 70 percent of South Africa’s poultry imports. Brazil disagreed with the South African allegation that it was dumping.

From which BRIC countries does South Africa receive a majority of its foreign investments and what are the sectors that receive high levels of such investment?

Of the BRIC countries, China is the top investor in South Africa and the sectors that receive high levels of investments are the banking sector, mining sector (focusing on chrome), and electronic goods assembly. Overall, South Africa ranks second in China’s
mining investment in Africa, behind the Democratic Republic of Congo (six projects). China has expressed its desire to diversify its investments into sectors such as information technology, biotechnology, human resources and other industry services.

Renu Modi is former director of Centre for African Studies, University of Mumbai.

Alisha Pinto is a Research and Operations Co-ordinator at Gateway House: Indian Council on Global Relations.

This interview was exclusively conducted for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

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