South Africa can't afford to have the Brics summit, which begins in Sandton, Johannesburg, on Tuesday, being used as an anti-West platform, says Stavros Nicolaou, head of the SA Brics Business Council.
“We as the business community in South Africa have to look at where our best interests are served, and they're served both from the East and the West.”
There has been a lot of pre-summit rhetoric about using the coalition of the emerging economies of Brazil, Russia, India, China and South Africa to “challenge Western hegemony”, including remarks by international relations & co-operation minister Naledi Pandor that the global order needs a rebalancing away from the West and that Brics could be the necessary counterweight.
“South Africa has got pedestrian growth, massive unemployment, a huge trade deficit with our Brics partners and other significant headwinds. We've got to focus on using our opportunities for business wherever they lie, and cut the politics,” says Nicolaou.
South Africa recorded a deficit of $14.9bn (about R285.3bn) in its collective balance of trade with the Brics economies in 2022, up from a deficit of $3.7bn in 2010.
Closing this deficit won't help much if, in the process, South Africa sacrifices trade opportunities with the West, notably its benefits under the US Africa Growth and Opportunity Act (Agoa), says Nicolaou, who in addition to his Brics work is group senior executive for Aspen Pharmacare, Africa's largest pharmaceutical manufacturer.
The deficit South Africa recorded in its collective balance of trade with the Brics economies in 2022, from a deficit of $3.7bn in 2010.
— IN NUMBERS: $14.9bn
“We've got to maximise our Western opportunities. If we get incremental growth out of the East, that's incremental. We shouldn't do anything that will in any way undermine our business relationships either with our Brics partners or our partners in the West.”
President Cyril Ramaphosa has stressed the need for South Africa to fix its trade deficit with Brics countries and Pandor has said this will be high on the agenda at the summit.
Nicolaou says while the business council “certainly ” sees Brics as an opportunity for South Africa to narrow its trade deficits, without a competitive economy it won’t happen.
“We have these deficits because we're exporting a lot of raw materials and importing a lot of finished products. We can't change this if our businesses are faced with rolling blackouts, a lack of basic infrastructure, dysfunctional logistics and pervasive crime and corruption.”
That's why business sat down with government and said: “Look, you don't have the capacity to fix these things; we want to give you that capacity. With the appropriate governance framework in place.”
He is confident that through recently formed national crisis committees, the country has a real chance to address these “disenablers” and capitalise on the opportunities presented by Brics and Agoa.
My confidence lies in the fact that we've got a pretty effective private sector in this country. With its resources and expertise, we can start to address the capacity deficits in government
“My confidence lies in the fact that we've got a pretty effective private sector in this country. With its resources and expertise, we can start to address the capacity deficits in government.”
The recent B4SA-Busa (Business Unity SA) initiative where the CEOs of 125 top companies signed a pledge to help government reverse the country's current trajectory is a key step to making this happen, he says.
Business leaders were equally confident in 2015 when they signed their much-vaunted pact with the Jacob Zuma government to help capacitate the state and arrest the country's precipitate decline. Instead, state capture went into top gear.
Lessons have been learnt by the private sector from its successful vaccine rollout initiative, he says.
“What was different with that initiative compared to any of the others we've had is that there was a joint oversight committee. That was central to its success.”
A similar joint oversight committee co-chaired by the Presidency and private sector which will meet every six weeks has just had its second meeting, and he's full of hope.
“This governance structure is better than anything else I've seen. We need to fix these things otherwise we're not going to close that trade deficit.”
Meanwhile, nothing prevents them from building confidence with investors and evaluating products.
What products?
“Our second-biggest export to Brazil is centrifuges. If Brazil is buying our centrifuges why don't we look to sell them to India and China?”
That's why drilling down into the trade statistics is so important, he says.
“Then you can see what is causing these deficits, what we're importing and what we could potentially offset with finished product exports. It's an exercise we're busy with. Turning deficits into export opportunities is what we're going to be aiming to do.”
A Chinese buying mission to South Africa last week that led to the signing of a commitment to buy R40bn worth of South African products from local firms is the start, he says.
Is there any point in the president stressing the need to turn our trade deficits around while continuing to support Russia?
“We as business are not supporting Russia, we're looking at where our interests lie. If you're going to take on risk such as supporting Russia, you've got to make sure that risk works for you.”
He likes to quote former US secretary of state Henry Kissinger, who said countries don't have friends, only interests. It needs repeating, he says.
Is the government listening?
“The fact that a Chinese trade mission came here last week and committed to import R40bn from South African firms means they are listening. They recognise there's a trade deficit and we need to work on it. That's progress.”
As was the recent joint government-business delegation to the US.
“That's progress. My understanding is that the US has agreed not to withdraw the Agoa conference from South Africa later this year.
“These are all positives because we've gone and we've spoken to government, we've expressed our concerns to government.”
Nicolaou says hard words are spoken with government when necessary.
“I think we call it the way it is when we speak to government.”
Among concerns business raised in a recent meeting with Ramaphosa was for the speedy passage through parliament of the Electricity Regulation Amendment Bill it considers vital to addressing the energy crisis.
So he must be disturbed by reports indicating the bill will in all likelihood only be dealt with by parliament after the 2024 elections?
“This is not in the spirit of what we've discussed with the president,” he says.
“This is one of those occasions where you've got to hold government accountable, and we will.”
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