Africa becoming an increasingly important trading partner for BRICS countries
A recent report by Standard Bank has shown that the BRICS countries’ trade with Africa has grown faster than the economic bloc’s trade with any other region in the world, other than its trade between the BRICS economies themselves.
Last year trade between Brazil, Russia, India, China and South Africa amounted to around US$310 billion, an increase of 11 times the amount it was in 2002 and accounting for nearly one-fifth of the group’s total trade with emerging markets. While this intra-BRICS trade has shown the most growth in the past decade, the BRICS bloc nevertheless trade more with Africa than they do with themselves.
Standard Bank’s analysts, Simon Freemantle and Jeremy Stevens, estimate that total trade between the BRICS and Africa reached $340 billion in 2012, increasing more than 10 times the amount seen a decade ago. “Since 2007, during a period of relatively slow trade growth (for Africa, the BRICS and globally), BRICS-Africa [trade] has more than doubled,” added the report.
“Looking ahead, we hold firm to our widely-cited projection that BRIC-Africa trade will eclipse $500 billion by 2015, roughly 60% of which ($300 billion) will consist of China-Africa trade,” stated the Standard Bank analysts in the report.
China makes up 67% of the BRICS total trade with the rest of the world, which the report describes as “unsurprising” because China’s economy makes up an estimated 55% of the total BRICS GDP. In addition, last year China became the world’s largest trader, overtaking the United States.
It is therefore also not surprising that China is the BRICS powerhouse that leads in terms of trade in Africa, and is Africa’s largest trading partner in general.
“China accounted for almost 60% of total BRICS trade with Africa, which is broadly commensurate with its economic size within the grouping,” explained the report. “Similarly, India’s role is consistent with its economic size, whilst Russia and Brazil are relatively under-represented. In the context of Africa, South Africa breaks the mould, punching above its economic weight.”
South Africa was included in the BRICS economic bloc at the end of 2010, forming the ‘S’ in the acronym. While it is the smallest economy in the BRICS group – making up around 2.8% of total BRICS trade and 2.6% of the group’s GDP – South Africa is nevertheless the third largest BRICS trading partner in Africa, accounting for around 11% of the bloc’s trade on the continent. According to Standard Bank’s research, South Africa’s trade in Africa last year was 35% greater than Brazil’s trade on the continent and 200% greater than Russia’s.
“Naturally, South Africa’s geographical proximity plays a clear role in its relatively large share of BRICS-Africa trade: over 80% of South Africa’s exports to Africa are absorbed by markets within the Southern African Development Community (SADC),” highlighted Standard Bank’s research. “Emphasising South Africa’s maturing role in Africa, around one-third of all non-mineral fuel goods produced by an African economy and sold inside Africa are produced in South Africa.”
BRICS still competitors in Africa
While intra-BRICS trade has shown considerable growth in the last decade, the bloc’s economies remain competitors in Africa, according to the report. “And, despite best intentions the group is diverse and has struggled to carve out a collective agenda. The solution comes from creating areas of collaboration and commonality, which can serve as learning exercises for the BRICS’ respective national and regional interests.”
In light of this, the fifth BRICS summit – to be held in South Africa’s Durban next month – will be based on the theme “BRICS and Africa – partnerships for integration and industrialisation”.