Brics bloc benefits: South Africa must ‘get house in order’ first

Trade agreements within the Brics bloc are going to be beneficial for the South African economy but South Africa must get its domestic policies in order, an expert says.

Daniel Silke, a political economy analyst, said the Brazil, Russia, India, China and South Africa bloc itself was not necessarily going to bring substantive benefits to South Africa.

But in the long run, the association would make a difference for country like SA. Brics is scheduled to hold its 15th summit in Johannesburg from Tuesday to Thursday, chaired by President Cyril Ramaphosa.

United Nations secretary-general Antonio Guterres and the five presidents of Brics, including Russian President Vladimir Putin, who will give an address virtually on Wednesday, will attend.

Russia’s delegates will be led by Foreign Minister Sergey Lavrov.

Silke said: “South Africa requires good domestic economic policy, excellent governance, huge investment in infrastructure, the ending of corruption and graft and a policy framework that is market-friendly and relates to public/private partnerships. All of that has to run concurrently with more symbolic issues related to Brics.”

He said mooted trading in domestic currencies and trying to wean off the dollar to some degree would help, but “it’s still going to be up to SA domestically to get our own house in order before there are real tangible economic benefits”.

SA and fellow Brics member states definitely had a desire to move away from reliance on the dollar and the influence of Washington and the US Fed when it came interest rates and the value of the dollar.

“Those two issues – the interest rates and the value of the dollar – do detrimentally affect developing countries, particularly those with weaker economies.

“The Brics countries themselves are looking for ways and means to alter that dependency, so to speak, on the influence of the Fed and the US currency.

“So, the Brics nations will be looking for ways in which they can trade more with their own currencies than continue on US dollar-based trading.

“That’s the critical issue here, we need to watch out what kind of mechanisms are in place,” Silke said.

According to Silke, right now Brics gave SA “more of a public relations coup than frankly any kind of economic benefit”.

“The fact that South Africa can play in the big league alongside particularly China and India, her name or brand can be associated with those huge developing countries, that really sends more of a message than direct economic benefits,” Silke said.