For Mboweni's growth plan to succeed the ANC has to give up certain dogmatic positions that were formulated when 7% growth was the status quo, writes Adriaan Basson.
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President Cyril Ramaphosa on the first day of the Brics gathering in Johannesburg (Photo: Gallo Images/Wessel Oosthuizen)
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November 2001, Jim O'Neil, head of research at investment bank Goldman Sachs
penned a paper entitled "Building Better Global Economic BRICs".
partly reviewed the origins and relevance of the bloc called the G7 which
comprises of France, Germany, the United States of America, the United Kingdom,
Japan, Italy and Canada.
originated as a G5, excluding Canada and Italy, in the early 1970s as an
exclusive club of finance ministers who met informally to discuss matters of
mutual interest, among others compatibility of currencies to ensure growth and
considered themselves – in fact they were – the leading global economies whose
economic prospects were intertwined. It was, therefore, in their best interest
to cooperate. As the G5, the outcomes of their summit were typically secret,
until US Treasury officials argued for some transparency.
In the late
1980s, the G7 became a regular forum of the most powerful finance ministers in
the world. Their decisions were important for the global economy. Investors
looked up to them. Developing countries, typically debtor countries, whose fate
was largely dependent on such decisions, always looked to hear the news coming
out of the creditor G7 countries.
2001, so much had changed, and a number of developing countries had developed –
and were still developing at a fast pace – to such an extent that their own decisions now had global impact. Thus,
O'Neil asked: "Does the G7 need an update?"
paper, he developed different scenarios using a number of economic variables for
what he termed the "BRICs" countries. Note that in the original "BRICs",
the "s" is lower case for metaphorical purposes. The acronym represented
Brazil, Russia, India and China. South Africa was not included as it didn't
meet his criteria of likely influential economies at a global level.
scenarios O'Neil developed, China followed by Brazil, came closest and even
better than some members of the G7. This led O'Neil to question whether this
wasn't enough justification for a G9. Russia was already, though informally,
part of an expanded G7 despite its economy not being as powerful as China or
conceive of BRICs as a separate bloc. But, the global political environment was
propitious for such a bloc. His idea found fertile ground: many emerging
economies, including South Africa, have been arguing for reforms to global
institutions. For political clout and legitimacy of the bloc as an increasingly
formal platform, South Africa was invited to join. The "s" ceased to
symbolise plural that accounted for proper pronunciation and for building "bricks".
It turned into upper case.
understand that in economic terms, South Africa didn't qualify. But for
political reasons – and perhaps long-term economic potential given its current
standing as the developed economy in Africa –
it made sense for South Africa to be invited. The BRICs platform
provides members an avenue to articulate their views about the global issues
because, collectively, they are relatively stronger than some of the G7 members
and therefore cannot be easily dismissed.
potential – though distant – threat economically to the G7, they can be
perceived to have ambitions to supplant the existing global system if the
existing holders of power in the system resist reforms. The formation of the BRICS
bank as a potential alternative to the International Monetary Fund and the
World Bank is just one example. Their plan to increase investment among
themselves, if pursued with vigour, could help rewrite rules of global
would be foolish to think that the BRICS could replace the existing rules of
the global economic system underwritten by the West. Many of them have huge
domestic challenges and their societies are intractably linked into the Western
system. And many emerging economies, including those of BRICS, had grown and
continue to grow thanks to their ability to create conditions for
West-propelled investments combined with indigenous ingenuity.
they are aware of the limitations and are now arguing for the most progressive
elements of the global system to be protected from the ruinous US presidency of
Donald Trump who has declared a trade war. Chinese president Xi Xinpin and
South Africa's Cyril Ramaphosa have argued against Trump's trade war.
are broad similarities in terms of the global agenda and the aspirations that
are being pursued by the BRICS countries, South Africa must not lose sight of
the need to work hard to match the economies of fellow BRICS members. There is
a need for South Africa to find an economic niche or niches within BRICS
through which it could compete in the interests of its economy.
China are two of the members of BRICS with the clearest agenda globally. China
wants to protect its status as the world's second largest economy. It does so
by not pursuing a defensive strategy. Instead, it pursues as an offensive
strategy which is not entirely negative.
pursuing what one might call an "infrastructure diplomacy". Nowhere
is this clearer than in Africa. Not only did China build the African Union
headquarters in Addis Ababa; it is also building and refurbishing a number of
African ports. You can't get more strategic than that if you want to expand
trade and investment.
its part, faced with American sanctions and accusations that it is meddling
with Western democracies, has been pursuing what the Foreign Affairs journal
describes as "nuclear diplomacy". Had Russia managed to secure the nuclear
deal in South Africa, it would be a massive diplomatic coup against the West.
nonetheless, pursuing the strategy in other parts of the world and it would be
naïve to rule out the possibility that it could clinch the deal in future.
India, for its part, has ambitions to be the next China – a better and, unlike
China, democratic one. Brazil is both a huge market and an investor.
In light of
the various strengths of fellow BRICS members, South Africa must not just be
happy to be a member and a host, as it is now host of the 10th
summit of the bloc. It must also not be happy to be seen as the largest economy
that dishes out invitations to neighbouring African countries whenever we host
Africa must not suffer the illusion that it is the leader in Africa. The truth
is, African countries are pursuing their own independent strategies and are
being wooed by various global players in different directions.
Africa's primary focus should be on how best we can benefit from our membership
of BRICS. Our noble global goals to advance the "African Agenda",
fight for reform of international institutions and other lofty plans must not
detract from the need to craft foreign policy goals that have a direct domestic
his minister of international relations and cooperation Lindiwe Sisulu, having
launched a review of South Africa's foreign policy, now have an opportunity to
recalibrate South Africa's position in global affairs in a manner than resonate
with our economic interests. The 10th BRICS summit will provide them
with a lot to think about.
summit, Ramaphosa should repurpose his investment-seeking and market-seeking
strategies so that by the time he assumes his first term as president (assuming
Julius Malema or Mmusi Maimane doesn't beat him at the polls!) he can have more
domestically impactful foreign economic policy.
- Mkhabela is a political analyst with the Department of Political Sciences at the University of South Africa.Disclaimer: News24 encourages freedom of speech and the expression of diverse views. The views of columnists published on News24 are therefore their own and do not necessarily represent the views of News24.
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