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South Africa has work cut out to reach BRIC goal
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South African president Jacob Zuma wants to join the BRICs. The likely deluge of foreign investment from membership of the club representing the biggest fast-growing economies would bring huge benefits. But Zuma has plenty to prove — including that he can avoid the BRICs’ worst failings.
The BRIC concept coined by Goldman Sachs, referring to Brazil, Russia, India and China, has attracted heavy global investment flows. That has speeded the four countries’ growth — although sometimes, as in Russia in 2007, it has also produced dangerous bubbles. With 25 percent unemployment and one of the world’s biggest gaps between rich and poor, South Africa would greatly benefit from a similar surge in foreign investment to employ its people and improve their living standards.
South Africa is already included in an emerging market grouping known as the CIVETS — the first five being Colombia, Indonesia, Vietnam, Egypt and Turkey — and its economy is too small to fit comfortably among the far larger BRICs. South Africa also lacks the massive natural resource base of Russia or Brazil. However its literacy rate at 86 percent is much higher than India’s 61 percent and quite close to China’s 92 percent.
Qualitatively, at least, BRIC membership therefore seems plausible. But South Africa is not currently achieving BRIC-like economic growth rates — the Economist panel’s growth projections of 2.8 percent in 2010 and 3.7 percent in 2011 are well below its projections for the BRICs. To boost investment and growth, Zuma needs to improve South Africa’s investment climate. Ranked 55th in the world for corruption by Transparency International and 72nd for economic freedom by the Heritage Foundation, South Africa beats all four BRICs on both counts, so the potential is there. But Zuma can’t safely copy China’s overbearing state apparatus or Russia’s disregard for property rights.
Zuma’s efforts to build closer links with China will be helpful, given China has plenty of money and a thirst for natural resources. But to reduce poverty, South Africa needs investment in manufacturing and services as well. That points to a need for Western-style private sector investors also — and Zuma should align his polices to welcome them.
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Let me to add to your usually informed views.
South Africa (SA) is fast tracking towards anarchy, a real disaster for the rainbow nation promising so much on the back of Africa’s best infrastructure and resource riches.
Since Nelson Mandela left the reins to traditional African-styled leaders with limited or no interest and understanding in maintaining basic infrastructure handed over to the ANC in 1994 while favouring own supporters to the detriment of some 90% of the population, the road to violence in the bloodied history of SA appears to be only a decade away, maybe a bit more. So talking about BRIC status or similar is not relevant.
Chinese investment is now so profound that even moderate ANC leaders and the new oppositin are concerned, but not Mr. Zuma as it clearly sits well with his view of one-party rule. The most recent attempt to suppress the free SA press with a view to allow more widespread nepotism and one-sided distribution of wealth is telling.
The World Cup show obviously dimmed the view of European nations and maybe also Washington, but the bill left over has to be paid….. and it is enormous considering GDP and growth limitations.
The well-known curse of a 20 year black-reign to be succeeded by civil war (mainly between black people) became postponed by Mandela’s reconciliation policies, but they are no longer effective. Frankly speaking, they have been erased gradually to such extent that Indians, Boers and English minorities are fleeing the country at a steady speed, while their SA-based assets are flogged and often acquired by ANC-representatives (via public funds) at modest prices.
Many in these minorities have surrendered as most of them fear staying on would eventually make their children’s life miserable in the future. Mandatory job distribution in favour of blacks, but not all tribes, colored, and Indians assist this sentiment.
While the literacy rate in SA may exceed that of India, some 15 to 20 million peaceful people living outside metropolitan-like areas and the millions in the slums have little, if any encouragement and possibility to embark on the train of a more prosperous future.
If spending only a couple of months in SA, you may learn the true state of the country.