At the end of last week Business Day Live reported on South Africa’s negotiations to host the BRICS bank.
“It is hoped the bank, with a $50bn starting capital, would rival the World Bank and International Monetary Fund, which are dominated by established economies.”
“While South Africa is the smallest of the BRICS economies, it has set its sights on hosting the bloc’s planned development bank. Pretoria diplomats feel that the country’s distinguished financial services sector — hailed in 2008 for its sophistication at a time when US and UK banks were at the centre of a global financial crisis — stood South Africa in good stead.”
With South Africa hosting the fifth BRICS summit in Durban from March 26 – 27, it is a good time to have a comparative look at the economies of the BRICS countries and the role of South Africa.
At the end of 2012, Business Insider reported on the growth of BRICS for the year and I would like to share their growth-rate indicators.
With an economy so much smaller than the rest of the BRICS, South Africa is referred to with question marks and as a quasi-BRIC. Earlier this week City Press also focused on how South Africans see their role within BRICS.
““South Africans wrongly doubt their own country’s ability to be part of the BRICS economic bloc”, International Relations and Cooperation Minister Maite Nkoana-Mashabane has said. “They think this thing (BRICS) looks too big.””
Nkoana-Mashabane said South Africa’s membership had delivered tangible trade and development benefits to the country. South Africa itself had much to offer the economic bloc, especially in terms of financial services, where it was a world leader. She said South African companies were doing business in many of the other BRICS countries, just as those countries’ companies were doing business in South Africa. She says “We … have the capacity to run the best financial services in the world. We are a very sound, dependable democracy, with an independent foreign policy.”
Will South Africa be able to host the BRICS bank? Will that end its “quasi-BRIC” status? Or is this wishful thinking?
While the bank could also be co-hosted in two countries, another important issue on the agenda for the BRICS summit is the proposed currency-swap. Ms Nkoana-Mashabane says she envisages a conclusion of the discussion on the currency swap to happen in Durban. “The idea behind a currency swap was meant to keep trade among the BRICS countries within the confines of this league’s currencies, so that “you don’t have to go through other countries that are not involved in the transaction””.
Intra-BRICS trade is another point on the agenda as it is currently more than $300bn and is expected to reach the $500bn mark by 2015.
I will be keeping a close eye on what is happening in Durban at the end of the month.
