Brics needs coordinated foreign currency effort – Zuma

2013-08-20 16:50

A “coordinated foreign currency” approach among Brics (Brazil, Russia, India, China and South Africa) nations was needed to deal with weakening currencies and boost investment, President Jacob Zuma has said.

“It will definitely assist in reducing currency volatility and under- or overvaluations, thereby enhancing both trade and investment,” he told delegates today at the Brics business council meeting in Johannesburg.

He did not elaborate, but announced that a tripartite free trade area would be launched to bring together countries in eastern and southern Africa.

“By 2015, we expect to establish a free trade area among these countries, combining the markets of 26 countries with a population of nearly 600 million and a combined GDP of $1 trillion (R10 trillion),” said Zuma.

He said this would create a single market of $2.6 trillion, and added there was a scope for “mutually beneficial partnerships” that would help Africa with its infrastructure.

Last year, total trade within the Brics grouping grew.

In 2012, South Africa’s total trade with Brics countries stood at R294 billion, up from R264 billion in 2011.

Total trade with Brazil grew from R18 billion in 2011 to R20billion in 2012, and with Russia from R3 billion in 2011 to R5 billion in 2012.

Zuma said total trade with India, South Africa’s sixth-largest trading partner, grew substantially from R53 billion to R67 billion.

Trade with China grew from R188 billion in 2011 to R201 billion in 2012.

“All these impressive statistics ... should provide you with the determination and confidence to deliver on the imperatives,” he told delegates. “The presence and influence of the Brics grouping continues to be felt.”

Brics countries account for 43% of the world’s population, around 18% of GDP and 40% of currency reserves, estimated at around $1 trillion.

Zuma urged delegates and businesses to take advantage of opportunities created by Brics as it “clearly had a lot of potential”.

Delegates heard that in coming years, South Africa would spend in excess of R4 trillion on its rail, roads, energy, water, sanitation and communication sectors.

Africa’s output was expected to expand by 50% by 2015, and result in a 30% rise in the continent’s spending power, said Zuma.

“It is becoming well known as well that the rate of foreign investment in Africa is higher than in any other region in the world. This is not surprising given the competitive edge of the continent.”

Zuma listed Africa’s advantages as “extraordinary” mineral wealth and agricultural potential.

South Africa’s mineral wealth is estimated at $2.5 trillion.

Zuma said the continent had a young working population and a growing middle class with considerable purchasing power.

The intention of the Brics business council was to provide a platform to explore new models and approaches towards more equitable development and inclusive growth.

Zuma said South Africa had done well under difficult conditions.

“South Africa remains an inspiring story of a nation working against all odds to reverse a devastating legacy of a deliberate underdevelopment of the majority.

“Census results released last year tell a story of a country that continues to make progress, despite global economic difficulties that affect even the most powerful economies,” he said.

“We are making progress steadily even in the face of persistent challenges such as poverty, inequality and unemployment.”

Brics business council South African chairman Patrice Motsepe said it was crucial that the commitment to increase trade and investment was “quantifiable”.

“There’s a new sense of urgency,” Motsepe said.

People wanted “value-added trade”, he said, adding that Brics was not about excluding other countries.

“We want to continue with trade ties with other countries like the US. We are part of a global economy. The world is interlinked.

“What happens in other parts of the world has an impact on us. We want to see them grow also and buy from us.”

Delegates were also addressed by the council’s acting chairman from China Ma Zehua, Brics council India chairman Onkar Kanwar, its Russian chairman Sergey Katyrin and Brazilian chairman Jose Rubens De La Rosa.

They spoke at length about enhancing connectivity, creating information exchange, expediting multiple-entry business visas and increasing value-added trade.

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