Stavros Nicolaou. (LinkedIn/Stavros Nicolaou)
The trade deficit between South Africa and its Brics partners is not insurmountable, Brics business council leader Stavros Nicolaou told the Mail & Guardian on Monday.
Brics economies accounted for 21.3% of South Africa’s total trade with the world in 2022, with China leading at 67.6%, India at 26.5% and Brazil and Russia’s trade amounting to 4.2% and 1.7% respectively.
The four countries in the Brics bloc accounted for 14.2% of South Africa’s merchandise exports while the European Union’s exports are estimated at 21.3%, with the United States at 8.8%.
Nicolaou said South Africa’s exports have grown overall in the four Brics countries, with imports outstriping its exports.
“That is why there is a resultant trade deficit. It’s no surprise that given the South African economy there is a trade deficit. The negative is running a deficit. The positive is that you can turn a deficit into a surplus or at very least bridge the gap sectorally and overall by exporting finished products out of the country to the Brics countries. We are rather seeing a surplus as a future opportunity than a negative,” he said.
Nicolaou added that the Brics business council was looking at the trade deficit with its Brics partners as an opportunity to start identifying areas of growth, regardless of the sectors.
“Industrialisation and manufacturing is key to addressing the trade patterns we are presently experiencing. Pharmaceutical and the medicine devices industry are the fifth largest contributor to South Africa’s current account deficit. Those are the types of pictures we need to address.”
President Cyril Ramaphosa has extended an invitation to all 54 African countries to attend the Brics summit in August to enhance Africa’s influence in the world.
The Brics business council will facilitate and host captains of industries from the different countries to help bolster South Africa’s trade relations.
Nicolaou said that although each of the invited African states have different trade and investment agendas, there is convergence of mutual interests.
He added that part of South Africa’s mission at the summit will be the promotion of partnerships and multilateralism on the continent.
“When we engage our Brics counterparts, there has been immense interest around Africa and how … we get collaboration between the Brics countries and Africa. Africa is important and the next frontier of economic growth. Brics countries are recognising the importance of Africa futuristically. They recognise South Africa as a fulcrum to Africa so that is certainly an area that has enjoyed significant attention.”
He said an additional aspect of the discussions between the Brics counterparts would be on post-pandemic economic recovery.
“Many of these Brics countries could have collaborated a lot more closely with us and we could have had some materially different outcomes. These are some of the areas we need to speak about and continue to address but they are all anchored on mutual interest and mutual outcomes.”
The Brics group, made up of Brazil, Russia, India, China and South Africa, has been discussing whether it should allow other countries from the global south to join. To date, 22 countries have formally applied to become members while an equal number have informally made their interest known. This is according to Brics South Africa sherpa, Anil Sooklal.
Egypt, Algeria, Mozambique and Nigeria are some of the African countries that have shown interest. Insiders privy to the discussions say Egypt, in terms of its strategic location, is receiving serious consideration for South Africa’s endorsement to join the group.
Egypt’s GDP, population size and its strategic location on the Mediterranean and the Suez Canal makes it an attractive partner, one insider said.
Asked whether the expansion would be a threat to South Africa’s trade interests in the bloc, Nicolaou said; “If we get a coherent group not driven by rules or contracts, there is a high degree of economic goodwill and collaboration, I think that will overall be beneficial to South African business.”