Speech by Deputy Minister of the Department of International Relations and Cooperation, Mr Marius Fransman, on the occasion of BRICS provincial Road Show in Cape Town, Western Cape Province, 05 March 2013.
Programme Director,
Members of the Diplomatic Community,
Consular Representatives from BRICS Member States
Members of the Business Community and Captains of Industry,
Members of the Academia and Think-Tanks,
Members of the Media,
Distinguished Guests,
Ladies and Gentlemen,
I want to take this opportunity to thank you for attending this breakfast event this morning. This BRICS roadshow gives expression to the ANC government’s determination of building a culture of participation and active citizenry, a critical ingredient for building a national democratic society that is non-racial, non-sexist, democratic and in which there is prosperity for all.
We are particularly happy to host you in the Western Cape because the global aims of BRICS include peace, security, development and cooperation and these to some extent or the other constitute the major challenges we also face as a province. Just as BRICS constitutes a mechanism to rectify the imbalance in the global economy and institutions of governance, it is vital for our growth and development to grapple with the question of how we make the relative prosperity of the Western Cape work for all the people of this province. This becomes extremely challenging in the context of the Cape being one of the most unequal places in the world.
The BRICS Summit is scheduled to take place from 26 to 27 March 2013 in Durban and constitutes one of the most important events in the 2013 calendar of our country.
BRICS is an acronym for the powerful grouping of the world’s leading emerging market economies, namely Brazil, Russia, India, China and South Africa. Owing to the imbalances characterising the current international order, BRICS seeks to advance the restructuring of the global political, economic and financial architecture into one that is more equitable and balanced and rests on the important pillar of multilateralism.
Ladies and Gentlemen; according to Globalization101 an initiative of the State University of New York, the volume of world trade has increased twenty-seven fold from $296 billion in 1950 to more than $8 trillion in 2005. Although international trade experienced a contraction of 12.2 percent in 2009—the steepest decline since World War II—trade is again on the upswing. This same report says that “although increased international trade has spurred tremendous economic growth across the globe - raising incomes, creating jobs, reducing prices, and increasing workers’ earning power — trade can also bring about economic, political, and social disruption.” –close quote. That is some food for thought.
BRICS believes that the international community should work together to strengthen cooperation for common development. The grouping calls for further international financial regulatory oversight and reform, strengthening policy coordination and financial regulation and supervision cooperation, and promoting the sound development of global financial markets and banking systems.
Programme Director, In his State of the Nation Address recently, President Jacob Zuma urged us to, individually and collectively, bear in mind that the triple challenge of poverty, unemployment and inequality required single-minded attention. In this regard, the New Growth Path is geared at achieving inclusive growth and creating jobs. Six jobs drivers were identified to help the country achieve the much-needed growth leading to jobs. These are infrastructure development, agriculture, mining and beneficiation, manufacturing, the green economy and tourism.
He further inspired us to make use of South Africa’s membership of BRICS to address the above challenges faced by our country. In this regard he mentioned the following and I quote:
“We are inspired by the exponential growth of bilateral relations, diplomatically and economically, between South Africa and other BRICS countries.”- Close quote
As South Africa strives for enhanced, inclusive economic growth that will lead to the creation of decent and sustainable jobs, advance the fight against poverty and accelerate the country’s economic transformation it will continue to partner with countries of the Global South which share common challenges outlined above.
Ladies and Gentlemen, The theme of the fifth BRICS Summit is: BRICS and Africa: Partnership for Development, Integration and Industrialization”.
This theme resonates well with our foreign policy objective of the consolidation of the African Agenda. In this regard, South Africa seeks to utilize its membership of the BRICS to accelerate infrastructural development in Africa.
The Asset Management Global chairman Jim O'Neill published an article entitled "South Africa's BRICS Score: Not All Doom and Gloom". O'Neil argued objectively and I quote “that South Africa could more than justify its presence in BRICS if it helped Africa to fulfil its remarkable potential by exploring cross-border expansion in trade and infrastructure, as well as improvements in domestic productivity.”-Close quote
Regionally, South Africa provides direct access to the rest of the continent and is situated between the East, the Americas, Europe and the Middle East. South Africa has many geostrategic and related structural advantages, making it an excellent investment destination and ideal “gateway” partner in the African growth story.
The Southern African Development Community (SADC) Regional Infrastructure Master Plan (RIMP), which could involve cross-border projects with a combined investment value of up to US$500billion, was approved at the SADC Summit held in Maputo, Mozambique, in August 2012 and in this regard, we believe that the proposed BRICS Development Bank, once it is up and running, could go a long way in assisting with the much investment funds for infrastructure development.
As South Africa is one of the leading investors among developing countries on the continent, South African companies can take advantage of this unique position, through partnering with BRICS companies to explore various investment opportunities.
BRICS leaders have already expressed support for infrastructure development in Africa and its industrialisation within the framework of NEPAD. The leaders reiterated the highest importance attached to economic growth that supports development and stability in Africa, as many of these countries have not yet realised their full economic potential.
The BRICS leaders undertook to take their cooperation forward to support Africa’s efforts to accelerate the diversification and modernisation of its economies, through infrastructure development, knowledge exchange and support for increased access to technology, enhanced capacity-building and investment in human capital, including within the framework of NEPAD.
BRICS countries have individually emerged to become new locomotives for global growth. As such China has recently been ranked as the second-biggest economy in the world; India currently stands as the 10th-largest economy in gross domestic product (GDP) in nominal terms, and is the fourth-largest economy in terms of GDP at Purchasing Power Parity (PPP). In 2011, Brazil became the world’s sixth-largest economy and Russia is currently the ninth-biggest economy. South Africa is ranked as the 26th-largest economy.
BRICS countries coordinate their positions and actions in international organisations, as seen in the United Nations (UN) and its various specialised agencies, etc. As a matter of fact, in the midst of the current global economic crisis, many countries in the world have weathered its effects due to economic cooperation with BRICS countries.
Ladies and Gentlemen, You now have a picture of what BRICS has in store for us as a province, country, and continent.
Our Government took stock regarding the importance of BRICS to every single one of us whether in the remote villages or in cities and as such a conscious decision was taken to convey a message to all and sundry and solicit inputs as we prepare ourselves to host the fifth BRICS Summit on our shores.
Programme Director,
In order to understand our position as Province within BIRCS, we need to ask ourselves the question: what are the economic strengths of BRICS and how is different from South Africa’s traditional partners and maybe, more importantly, why South Africa joined BRICS?
BRICS countries share 25% of the global GDP, 30% of global land area and 43% of global population. It is anticipated that over the next ten years BRICS global share of GDP will increase from about 20% to 28%. Currently, these economies share more than a third of the world’s GDP.
Ladies and gentlemen; I want to share some insight with you from a recently published research paper by one of the leading global think-tanks, Mc Kinsey International titled “Unlocking the potential of emerging market cities”. This report says [and I quote]: “A massive wave of urbanization is propelling growth across the emerging world. This urbanization wave is shifting the world’s economic balance toward the east and south at unprecedented speed and scale. It will create an over-four-billion-strong global “con-sumer class” by 2025, up from around one billion in 1990. And nearly two billion will be in emerging-market cities.”
“These cities will inject nearly $25 trillion into the global economy through a combination of consumption and investment in physical capital. This is a very significant shot in the arm for a global economy that continues to suffer from pockets of acute fragility”. The report further says that approximately 440 emerging-market cities are poised to deliver close to half of global GDP growth.”-close quote
It also cites the McKinsey Global Survey 2012 and says that by 2015 of all emerging market cities with household incomes of $7,500–$20,000 at purchasing-power parity, the top five cities will be in Africa whilst 7 of the top 10 emerging market cities in the same category will be in Africa.
Ladies and Gentlemen; BRICS considers issues of critical significance to developing countries such as the role of the emerging economies in promoting the transformation of global governance systems. Thus, South Africa believes that through the collective voice of BRICS, institutions such as the United Nations Security Council, World Bank and others could be transformed.
When we joined BRICS, we had three objectives in mind namely; to advance our domestic challenges, secondly to promote regional integration and related continental infrastructure programmes and thirdly to partner with key players of the South on issues related to transformation of global governance.
Distinguished guests; It is often said, commerce has stitched much of our world together. In this regard as a country and more importantly as a Province, we would surely wish to be part of the global cloth that is stitched together by international trade.
As such our BRICS membership has prospects for contributing to the growth of our exports, attracting investments for our economy and job creation. This is in line with our foreign policy commitment to advance our domestic priorities.
Our Government has already indicated to our BRICS partners in particular China that, in this relationship of equals, we don’t just want to be exporters of raw materials, but we need technologies to process our minerals into finished goods.
Our Province can benefit in the agricultural sector. Agriculture is one of the primary pillars of the Western Cape economy. Although the province contributes some 14% to the country’s Gross Domestic Product, it generates almost 23% of the total value added by the agricultural sector in South Africa, Agriculture accounted for 5,2% of the Western Cape’s Gross Regional Product of R185,4 billion in 2004.
According to Western Cape Trade and Investment Agency (Wesgro) the Western Cape has proven itself as a suitable producer of agricultural products since the Cape became a halfway stop en-route to the East, as early as 1652. The expertise built up through a proud heritage of farming, sophisticated education, training and research facilities are leveraged through continuous new developments, which help to promote the sector locally and internationally.
Some areas of focus and development include:
- Agri-tourism
- Exotic meat and leather
- Natural products including cut flowers
- Organic farming practices
- Essential oils
- On-going expansion in the wine industry
The Western Cape also contributes approximately 20% towards South Africa’s total agricultural production. In terms of the creation of new markets for the Western Cape agricultural produce, I am glad to mention that the Province is already a beneficiary of BRICS markets. For example, the top five major precuts exported by South Africa to China during 2011 were wool, wood pulp, grape wines, fish meal and sheep skins.
As a geographic gateway to Africa, South Africa - and the Western Cape in particular - has a strategic position that also offers opportunities for oil and gas service providers to the West African market.
Ladies and gentlemen; The event in Durban also offers the opportunity of a Business Forum that will take place on the margins of the Summit. The Business Forum will strengthen our intra-BRICS relations. The forum is expected to offer opportunities for BRICS nations to enhance cooperation in ways that will promote the economic development agenda of BRICS.
One of the most important sectors of our Province’s comparative advantage is the renewable energy. You know that ours is a Province of the wind! We can tap into the renewable energy technologies available in the BRIC countries such as Brazil and India in order to make use of our wind maximally and to complement the existing projects in this regard.
We must therefore support Western Cape as it position itself as a potential investment destination and is prioritising key economic sectors to contribute to job creation which is one of our objectives for joining BRICS. This Province is viewed as the stronghold of South Africa’s economy because of the mining sector which contributes to the country’s GDP.
It is also significant that we acquaint ourselves and support this prestigious initiative in order to maximise the benefits. Our partnership of BRICS brings development for our national interest and that of the African continent as suggested by our foreign policy. We therefore look forward to welcome the world into our shores and the much anticipated outcomes of the Summit.
Finally, allow me to close with the reassuring words of our Minister Ms Maite Nkoana-Mashabane recently when she said: “From a substance and logistical point of view, everything is on track. We are progressing well with our planning. We also have a robust plan to publicise the BRICS Summit both nationally and internationally. It is crucial that the achievements of this forum be understood and appreciated by our people, as well as by the international community.”
I thank you all for attending.
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