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Towards An Open World Economy

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Analysts predict BRICS could become as big as the Group 7 by 2027. Can the BRICS nations effectively come together promoting inclusiveness, trade and technological collaboration?

The recurring question at the three-day BRICS summit in July, which brought some of the planet’s most powerful leaders to Africa’s richest square mile Sandton, was the importance of the Fourth Industrial Revolution (4IR) when it comes to inter-trade. So what happens next?

The 4IR, like the three revolutions preceding it, has disrupted economies and societies around the globe. In many instances, developing countries have been left behind, perpetuating the exclusion of the past rooted in colonialism and exploitation.

The leaders of Brazil, Russia, India, China and South Africa (BRICS), who are aware of the enormous hurdles, used the gathering in Johannesburg to issue a clarion call for united and concerted action for the impending revolution.

Host president Cyril Ramaphosa of South Africa – which is the current chair of BRICS – said the 4IR presents the world with opportunities and should be embraced.

“As the BRICS forum, we can neither ignore, nor take for-granted, the reality that is the Fourth Industrial Revolution and the impact that it will have on the global economy. There is no area of economic activity that is immune from technological disruption.

 

Cyril Ramaphosa. Photo by Gypseenia Lion

 

 “It [The Fourth Industrial Revolution] has the potential to solve many of the social problems we face, by better equipping us to combat disease, hunger and environmental degradation.”

The 10th summit, hosted in South Africa for a second time, was held from July 25 to 27. It brought together a galaxy of delegates, government officials, business people and the media at the Sandton Convention Centre.

Roads were barricaded amid heavy police and military presence, with strict no-flying zones applied as Vladimir Putin and Xi Jinping, among some of the world’s most reclusive leaders, spent a night or two under African skies.

Under the theme, ‘BRICS in Africa: collaboration for inclusive growth and shared prosperity in the 4th Industrial Revolution’, the focus of the summit was issues and solutions to achieve inclusive growth through collaboration.

Technology, big data and innovation were amongst the most operative words. Ramaphosa set the agenda by highlighting the role technology will play years from now.

“The technologies of the Fourth Industrial Revolution provide developing and emerging economies with the opportunity to leapfrog the technologies of the preceding revolutions.

“It aims to translate the vision of the second decade of BRICS cooperation into reality through deepened cooperation on industrialization, innovation, inclusiveness and investment,” he said.

India’s Prime minister, Narendra Modi, emphasized the need for shared policies and collaboration in order to unlock the opportunities of the future.

But, he added, the consequences of the revolution may be difficult to predict.

“Whatever happens will be far-reaching. We need to discuss how we will prepare for it. Traditionally, manufacturing will continue being a source of jobs for our youth. We need to make changes in our approach and make sure that schools prepare our youth for the changes,” said Modi.

The BRICS Youth Forum started off as an idea during a meeting between the heads of the five states in South Africa in 2014.

Encouraging dialogue with regard to youth policies and employment, the forum has notched some progress.

READ MORE: Why We Need ‘Hard Cash In The Economy

South Africa’s Minister of Higher Education and Training, Naledi Pandor, said the youth forum consolidated a set of messages that was to be sent to the BRICS leaders.

“The youth have begun to speak, they believe BRICS should be a solid formation and they have ideas on how the youth should collaborate to ensure that the BRICS idea is not just the idea of our generation but one that exists in perpetuity,” she said.

As argued by the South African Minister of Science and Technology, Mmamoloko Kubayi-Ngubane, collaboration between the youth from the five states will take the form of what she called “young researchers’ exchange”.

For Kubayi-Ngubane,“the inclusion of young people especially with regard to new tech and innovations should be prioritized as much as  the formal trade collaboration.

“Innovation [is] becoming the cornerstone for our economy going forward,” she told FORBES AFRICA.

(left to right) India’s Prime Minister Narendra Modi, President of China Xi Jinping, South Africa’s President Cyril Ramaphosa, President of Russia Vladimir Putin and the President of Brazil Michel Temer. Photo by Karen Mwendera.

The BRICS countries, which account for 40% of the world’s population, have not been laggards with regard to technological advancements, with the World Economic Forum noting in 2016 that four of them – South Africa, Brazil, China and Russia – are in the top 100 list of countries with the latest technologies.

The President of BRICS’ New Development Bank, K V Kamath, says that some of their big investments “include power, port and renewable power”.

Analysts predict that BRICS could become as influential as the Group 7 (the USA, Japan, Germany, France, Britain, Canada and Italy) by 2027.

Therefore, the collaboration of BRICS nations is a key strategy to strengthen not just political powers but technological capabilities as well.

However, this collaboration calls for the redefinition of borders and going against the norms of sovereignty.

During the summit, emphasis was placed on establishing open economies. This would help foster easier trade between BRICS countries.

Within the hallways of the convention center, presidents Jinping and Ramaphosa shared a joke as they walked side by side towards the stage. They had caught up earlier.

China has dominated the trade relationship with South Africa, with some analysts going so far as to suggest that the world’s second largest economy is dumping goods in South Africa.

Dressed in black and a blue tie, the Chinese president said he was delighted to visit the Rainbow Nation once again and used his opening address to drive home a message clearly directed at US President Donald Trump.

“We BRICS countries should firmly promote an open world economy, be resolute in rejecting unilateralism and protectionism, promote trade and investment liberalization and facilitation, and jointly steer the global economy toward greater openness, inclusiveness, balanced growth and win-win outcomes for all,” he told the 1,000-plus business leaders present.

Among those present at the summit was Alan Mukoki, CEO of the South African Chamber of Commerce and Industry, which groups approximately 20,000 small, medium and large enterprises.

Mukoki said as desirable as having open economies among the BRICS countries is, it may have negative implications for those members not as developed as the others.

“You need to manage those things correctly, you need to say ‘let’s all start on an equal footing’. We start together and then when we are equal, we can then go and race an open race,” he told FORBES AFRICA.

“Even though I look fit, you can’t say that I should run the same race as Usain Bolt. It is not going to happen…otherwise we will destroy and decimate the economies of the region. South Africa’s economy cannot be big if the economies of the region are actually small,” he said.

Mukoki said the right mechanisms and strategies should be put in place in order for each member state to compete equally.

Others however remain hopeful.

South Africa’s Minister of Trade and Industry, Rob Davies, chose his words carefully when describing what South Africa is looking for regarding trade and investment in an open economy.

“It’s all about building regional value chains allowing us to up the value chain and become more sophisticated producers of industrial products and more value-added products,” he told FORBES AFRICA.

For South Africa, the involvement in BRICS is an opportunity to strengthen intra-Africa ties. A number of countries

Trevor Ngwane, coordinator of the Break the BRICS coalition, hands over a memorandum of demands to South African Minister of Public Works, Thembelani Nxesi. The Group gathered outside the Sandton Convention Centre claiming BRICS in “anti-poor”. Photo by Gypseenia Lion.

were invited to an outreach program of the BRICS summit, including Ethiopia, Angola, Zambia, Namibia, Senegal, Jamaica, Gabon, Togo, Uganda and Rwanda. Each presented opportunities to deepen their partnerships with BRICS countries.

 

“BRICS is not in competition with anyone, BRICS seeks to work with the entire global community for the betterment of humankind,” said Anil Sooklal, ambassador for BRICS, to FORBES AFRICA.

“The summit is not the end, the summit is the beginning of a process.”

– By Gypseenia Lion and Karen Mwendera

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