Jambo Africa Online’s Associate Editor (Business), MAKATISHA MOTSEPE-MPHULWANE, was in conversation with Busi Mabuza, Chair of the SA BRICS Business Council; and Stavros Nicolaou, a member of the SA BRICS Business Council on the sidelines of the Africa Continental Trade Area (ACFTA) Business Forum 2023, hosted at the CTICC, Cape Town, South Africa from 16 to 18 April 2023…
SA BRICS Business Council (SABBS) is acutely aware of its responsibility to promote and protect the operationslisation of the African Continental Free Trade Agreement (ACFTA) as a catalyst tool to boost intra-African trade and that South Africa has to leverage its cooperation with BRICS to ensure enhanced global economic participation for the broader African continent.
Stavros Nicilaou touched on a number of issues among others, the emphasis on the importance of establishing procurement mechanisms from ourselves to the the rest of the continent that will be beneficial to our economies; Industrialisation; producing our products at huge scales and developing global competitiveness through economies of scales.
Makatisha: How will SA BRICS Business Council through ACFTA tackle the execution and implementation of these objectives to achieve its mandate?
Stavros: I think firstly, let’s preface the response by citing a very important global context: BRICS today represents purchase power parity terms of over 31,5% of global GDP. So to place it into further context, it’s bigger than that of the G7 and that is a starting point. So any formation whose share of the global GDP is over 31% is endowed with opportunities for the African continent. Secondly, the African continent on a disaggregated basis, as is presently the case, is unable to compete with as much bigger economies because you have 55 countries, all very small and unable to compete in global terms. However, if we’re able to aggregate and defragment the continent through important instruments such as the African Continental Free Trade Agreement (ACFTA) then we are starting to consolidate a population of 1.7 billion people and an economy that is larger than $3,4 trillion. Now we’re able to put ourselves into the same gambit as China and India and other big regional economic players. And that’s a very important point, because we’ve never been able to compete as a continent. Now, suddenly, we get economies of scale and economies of scale as I was saying earlier, is very important when you want to industrialise a continent, our continent is not industrialised, it’s a serial import of products. These result in us incurring trade deficits. We can change that picture through aggregation and pooling of volumes. And that is, for me, the single most important mandate of the ACFTA: to set up aggregated procurement on the continent. So we can leverage the continent’s entirety of volume, and also set up procurement mechanisms to do this procurement at scale. Scale will allow us to start competing outside of the continent as well, and will open up many doors for us, both within the continent with the extra continental need as well. Now, BRICS is a very important conduit to achieving it, because many of the sectors, companies and products that the first four BRICS member states are countries with huge GDPs and produce products that are complementary on our continent. And it gives us that opportunity to collaborate and cooperate with these countries to set up manufacturing and industrialisation on a coordinated basis on our continent, so that we can start creating jobs on our continent, start deriving maximum economic value, then industrialisation and also moving into what we call additive manufacturing. So the council that we represent, the South African chapter of the BRICS Business Council, is very much the nexus between the ACTFA on the one hand, and then the opportunities that result with Brazil, Russia, India and China on the other hand, and we’re kind of the glue that sticks them together.
Makatisha: Latest statistics indicate the combined global share of the BRICS – particularly through its Development Bank – have surpassed that of the G7 (31% versus 30%), but how do we ensure South African and African economies leverage on their BRICS’ membership and patronage to increase their share of global foreign direct investment and trade to develop their economies?
Busi: Industrial Development Corporation (IDC) provided research specifically for us as the BRICS Business Council looking at our tradable products. The Phase One of the research just looked at South African market. What is South Africa exporting to the BRIC countries? And what are the BRIC countries importing from other economies, that we have the capacity to produce as South Africa? So what are we exporting to the European Union (EU), for example, and not yet to the BRIC countries because that knowledge will give us the opportunity to start targeting specific strategic export products that we can get market share in insofar as the economies are concerned. So an example in real life is that in the agribusiness working group, they decided to target three big exporters to the EU faced with difficulties – sometimes that include the non-tariff requirements such as the EU’s black spot policy which leads to our fruit export cargo being rejected there. So our agri-business went on a deliberate strategy to increase our market penetration into China. And they have been able to grow their exports threefold. So they increased their volume by over 300% just by targeting one of the BRICS markets. So we value this research conducted by the IDC. We have asked them to embark on Phase Two in which they will look at the economies continent-wide. This will be useful because the continent exports mainly raw materials, raw commodities, and then we reimport them as beneficiated products. IDC will now look at export opportunities of the continent to the BRICS countries, what can be beneficiated in the continent, so that we are exporting value added products and therefore get better value from that. And I believe that if you take the kind of militaristic approach that our agribusiness sector took, you will start seeing us grow our global market share.
*** BRICS Breakfast December 2019 ***
Makatisha: The BRICS Summit will be hosted in SA in August 2023. Please share your efforts as the BRICS Business Council in mobilising the South African private sector in supporting this initiative.
Stavros: Firstly, we’re in a council that was selected and nominated by the South African business. So it’s not coincidental that we find ourselves in the council. We represent the entirety of South African business. Our nominations came through Business Unity South Africa (BUSA) and the Black Business Council (BBC). So between those two formations we represent in excess of 90% of businesses – ranging from small, medium to big business in our country. Our primary constituency, then, of course, is the entirety of South African business. And the way we intend to best engage and continue engaging with South African business is through what we’ve created. We established nine working groups, working streams, and each one of these streams was deliberately selected to represent a pivotal part of the economy. Pivotal, both in terms of growth opportunity, but also what you see in the South African economy? So these nine working groups for example, represent finance, infrastructure, agriculture, agri-food, manufacturing and so on and so forth. So there are nine working groups, that we are busy reorienting somewhat currently is the aviation working stream. So these are deliberately selected because they represent growth opportunities and they are populated by business people that are subject matter experts or invested in most businesses. Our engagement through those nine working streams is aimed at drawing in South African business on the one hand, and also opening up the opportunity on a bilateral and multilateral basis for our business people to interact with their counterparts in aviation, in agribusiness, in infrastructure and other sectors across the other four BRICS member states. And then of course, under the chairship of our capable Chair standing right next to me, we are intent on bringing in a sizeable African delegation representation to the summit that will be held in Johannesburg in August 2023. So not only are we looking at crowding in South African business, but we want to amplify this to the entirety of the continent across these nine sectors.
Busi: And may I just amplify that because we have now embarked on this, having started at last week’s South Africa Investment Conference, and this week’s ACFTA Business Forum has been very important to our efforts to reach out to the different regional business bodies. We envisage that we will have in the next two and a half months a roadshow, not just to the provinces in South Africa, in partnership with the national and provincial development agencies, but also to the regional economic blocks such as the Economic Community for West African States (ECOWAS), the Southern African Democratic Community (SADC), the East African Community (EAC), Economic Community for Central African States (ECCAS), Arab Maghreb Union (UMA), Common Market for Eastern and Southern Africa (COMESA), Community of Sahel–Saharan States (CEN–SAD) and Intergovernmental Authority on Development (IGAD). We are partnering in this regard with the Department of Trade, Industry and Competition as well as Brand SA. We really intend to make sure that by August 2023, in fact, the marching orders from our Minister, Mr Ebrahim Patel, is that broader society in the country and continent must feel a sense of ownership for our work programme.
*** Annual Meeting of BRICS held in Brazil in 2019 ***
Makatisha: There are rising tensions in global geopolitics that also impact on SA’s membership of BRICS, how do you intend mitigating risks against our private sector suffering reputational damage in the West? The local media even pushes the narrative that SA risks losing US investments worth over R400 billion by continuing to defend its nonalignment stance with regards to the Russo-Ukrainian war and its relationship with Russia.
Stavros: So we are a Business Council and our mandate is to assist South African companies and different sectors in the South African economy to grow. And that growth can come from the East or the West or even from both. Our role is to play an enabling and facilitating role to pick out those best growth opportunities. And those growth opportunities, the way we’ve assisted as a council reside both in the east and the west. So our main interest here is to identify those growth opportunities. We always promote businesses following growth, trade, commercial and investment opportunities with the appropriate moral compass. We always advocate for that and we are open to trading with both the East and the West as long as it is beneficial to our country whilst we use the appropriate moral compass in which to do so. I can also say that we are a business constituency and as a council that is alive to the plight of any humanitarian issue that arises globally. Whether it is an earthquake in Turkey, in Syria, a war in Ukraine, an explosion in Beirut, regardless of wherever there is a humanitarian need, South African business must step up. But we also look at where there’s growth and investments.