Like reality TV and the iPhone, the Bric alliance was founded in the era of global consumer optimism. The term was coined by Goldman Sachs chief economist Jim O’Neill in 2001, to group together potentially large, profitable future consumer markets, in a paper about the economic potential of Brazil, Russia, India and China.
This was when China was still growing at nearly double digits. The foursome held its first summit in 2009, with SA invited to join a year later, still basking in the euphoria of the 2010 Fifa World Cup success.
As it was one of the chief foreign policy aims of the Zuma administration to cosy up to the Chinese and Russians, it was paraded as a coup — because there is no fathomable reason for SA to have been lumped together with four economies that are by almost all metrics far larger, displaying higher potential growth rates. Many thought Brics would die a similarly incoherent death. But it has lived on, seemingly fuelled by a united disdain for anything from the evil, neocolonial West.
Against all odds, the bloc trudges on (whether one can even call it a bloc is debatable given that there is no secretariat, no constitution, and no real membership form, so to speak). On Tuesday, the 15th summit of those Brics characters is set to kick off in Johannesburg — a raucous affair for the heavy hitters of geopolitics.
President Cyril Ramaphosa will no doubt swan in the political limelight, rubbing elbows with India’s Narendra Modi and Brazil’s Luiz Inácio Lula da Silva, a man known simply as Lula, a moniker that echoes through the ages. Then you have the Chinese showstopper, Xi Jinping, adding his weight to this intriguing gathering. And, thankfully, no Vladimir Putin.
But what do we make of it all? What has the alliance achieved? The Brics Development Bank is the apogee among a litany of underachievement. Now, with talk of another about 40 countries clamouring to add their names to this wall of anti-Western assertiveness, the latest talk is of creating a common Brics currency to rival the dollar — an idea as daft as it sounds.
O’Neill could scarcely contain his incredulity in an interview with the Financial Times last week in the build-up to the summit. “It’s just ridiculous,” he said in response to calls for a “trading currency” from Brazilian president Lula. They’re going to create a Brics central bank? How would you do that? It’s embarrassing almost.”
Quite. But we can’t be too quick to dismiss the usefulness of the platform for China to further its sphere of influence as its tensions with the US deepen. China has been spearheading a charge against the universal values of democracy, arguing that they are the new imperialism imposed upon people who want security and stability instead. It’s a seductive message for autocrats.
But beyond the politics, perhaps Ramaphosa should ask Xi to have a word with the state-owned China Railway Rolling Stock Corporation about honouring its commitment to deliver the required spares that would bring 159 Transnet Freight Rail locomotives back into service within six months, and deliver 99 outstanding new locomotives. It was among those found to have been implicated in state capture, having paid billions in kickbacks to Gupta companies.
This would hugely improve railing performance on the critical North Corridor, as the locomotive problem is estimated to have reduced railing volumes by 18.5-million tonnes per year — 22% of the line’s designed capacity of 81-million tonnes.
And, it would be nice if China Railway could pay its taxes too.
I’ve been thinking about the Competition Commission’s decision to hang up on the proposed acquisition by Vodacom of Maziv, which was founded in 2022 by Remgro-owned Community Investment Ventures Holdings. The latter had merged its fibre network operators, Vumatel and Dark Fibre Africa, into a strong fibre infrastructure firm.
Under the terms of the agreement, Vodacom will buy a 30% share in the newly formed Maziv, with the opportunity to expand the investment by 10%. The acquisition is worth R10bn, according to chair Pieter Uys, a former Vodacom CEO.
As far as I can understand the commission thinks fibre and 5G fixed wireless services compete, and absent the merger these firms might compete more, especially in rolling out in areas that are now less served by fibre than others, and that Vumatel now constrains Vodacom to some extent in what it can charge for data. It seems to believe the merger would remove this constraint and Vodacom would be able to keep prices the same (or even increase them).
The problem is that the commission doesn’t believe in, and flatly refuses to weigh up, real efficiencies. It would rather protect competition (and in this case, the potential for competition) and what might possibly happen at some point in the future (in a world they think is better than the one the big bad businesspeople live in).
The message is consistently that big is bad, and that it would be difficult for a company of scale to make further investments in SA.
• Avery, a financial journalist and broadcaster, produces BDTV's Business Watch. Contact him at badger@businesslive.co.za.
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