The BRICS group of emerging economies (made up of Brazil, Russia, India, China and South Africa) gather at the 5th annual BRICS summit in Durban, South Africa. It is the first time the summit is being held in Africa – and rightly so – as the theme for this year is BRICS and AFRICA: Partnership for Development, Integration and Industrialisation. State leaders of the five countries will be among at least 5,000 delegates at the two-day summit.
There were high expectations when South Africa was officially invited to join the group in 2010 – despite criticism that it didn’t belong there. Even Jim O’Neill, chairman of Goldman Sachs Asset Management, who coined the BRIC concept more than a decade ago wasn’t pleased with the addition of the “S”. According to O’Neill, South Africa is a smaller economy, and its GDP growth rate doesn’t quite match up to the other players in the group. “Is South Africa the odd Bric out?” asked the country’s Mail & Guardian paper ahead of the the summit opening, citing its ranking as the 29th largest economy in the world.
“By contrast, China is the world’s second largest economy,
Brazil the seventh, Russia the ninth and India the tenth.”
South Africa is therefore seen by many as a mere symbolic representative, a gateway into the now much sought after African market. So how much is the continent currently benefiting from the leading emerging markets in the group? According to a new report released by the United Nations Conference on Trade and Development (UNCTD), very little. Africa makes up just 4% of combined BRICS Foreign Direct Investment (FDI) outflows; BRICS’ investment in Africa, however, represents a quarter of the continent’s total inflows for 2012. At the same time, FDI between the group remains limited:
“FDI stock to other BRICS account for only 3.2% of Indian outward stock,
2.2% of Chinese stock, 0.3% of Russian and Brazilian outward stocks…” - UNCTD
In our infographic below, you can see the main imports and exports to and from Africa for each of the BRIC countries. We also included the figure for total trade inflow and outflow between each of the countries and Africa.
Below we take a look at bilateral trade relations between Africa and each of the BRIC countries (South Africa excluded) –from Africa’s larger trading partners of India and China to its burgeoning partners of Brazil and Russia, we delve into the histories of these trade relations and look at modern trends.
Despite Brazil’s strong ancestral ties to Africa (it has more people of African descent than any other country outside of the continent), trade between the two has remained somewhat limited, with much focus on oil-rich Angola and Mozambique, both former Portuguese colonies. However, that doesn’t mean this trend isn’t improving. According to the African Development Bank, trade between Brazil and Africa increased more than sixfold in less than a decade (from 2000 – 2008), jumping from $4.2 billion to close to $26 billion. Minerals and crude material make up at least 80% of Brazil’s imports from the continent, while Africa imports mostly agricultural products from the South American country — along with ethanol and car parts.
Out of all the BRIC countries, Russia’s trade relations with the Continent are the least developed. The largest part of Russia-Africa trade is made up of Food, Beverages and Tabacco import/export, followed by oil and mineral products, and then manufactured goods. Value of trade between the two peaked in 2008 according to the African Development Bank, coming in at $7.3 billion. The AfDB report on Russia’s economic engagement with the continent further shows that while Russia’s imports from Africa rose to $1.6 billion in 2009, exports grew to $4 billion.
India and Africa share not only a rich history of trade but also share an affinity for one another in modern times, with each one supporting the other in their struggles for independence in the 20th century. Similar to China, India has greatly accelerated and diversified its trade relations with Africa in the last decade. As an importer of oil and other natural resources, India has diversified its trading partners beyond its traditional East African partners to include oil-rich Nigeria, and resource-rich South Africa. Uranium from Niger, Uganda and Tanzania is also vital to India’s nuclear power industry.
While trade has existed between China and Africa for centuries, in the last decade, trade has accelerated rapidly. Today, China is Africa’s largest trading partner with deals totaling $160 billion in 2011. While China maintains broad trade relations with 49 African countries, the bulk of trade between China and Africa is concentrated in a few countries. Angola, South Africa, Sudan, and the Republic of Congo all export oil to China, and make up 70 percent of African exports to China.
What do you think? Do you think it’s an even balance of give and take between Africa and the leading emerging markets that make up BRICS?