With a combined population of 2.88 billion people and a gross domestic product (GDP) of nearly $16 trillion (R237trln), BRICS is an interesting grouping.
It is clearly not a team of equals, and during the Summit, each head of state clearly drove a specific agenda, which was not necessarily aligned to the other members. These agendas are forged in part by their geographical locations, ideological attachments and their respective geopolitical contexts.
The global view of BRICS is mixed. The pessimists see no common ground, as the five members are dispersed geographically, and their economies are at different stages of development, with China surging and Russia, Brazil and South Africa slipping in recent years.
The optimists see BRICS as a beacon of hope in a turbulent world – and they are in the majority. Indeed, in the past 10 years, the members have boosted cooperation on issues such as trade and infrastructure finance, and made modest progress on understanding each other’s industry, R&D and government policies. They remain a prime example of how a diverse group of nations can continue dialogue and co-operation.
By hosting the Summit, South Africa attracted the attention of the world, and raised two major questions: What South Africa can learn and leverage from BRICS that could stimulate its growth and prosperity? And does South Africa add value to the other four countries?
To answer these questions, we turned to the ranking results of the IMD World Competitiveness Yearbook, the leading annual report published by IMD since 1989 that ranks the world’s 63 most competitive nations on more than 340 criteria under themes like economic performance, business efficiency and government performance.
We examined the comparative ranking of a number of critical criteria for the BRICS countries that could have mutual influence on the relationship among the five countries.
So, is South Africa a strong member of BRICS? For a start, GDP per capita is nearly 70 percent of that of China, and 62 percent of Brazil – but the cost of living in South Africa is only 53 percent of China and 62 percent of Brazil.
Small and medium-sized enterprises (SMEs) in South Africa outperform their peers in Russia and Brazil and come close to Indian SMEs in terms of efficiency, although they still have some way to go to reach the efficiency levels of Chinese SMEs.
South Africa outperforms Russia and Brazil, and comes close to India, in areas like retaining talent, funding availability for technological development, and agility, although they lag their Chinese counterparts in all three of these areas.
In terms of financial regulations, South Africa leads the rest of the BRICS grouping when it comes to the efficiency of its finance and banking regulations and the implementation of shareholders’ rights.
Based on these criteria, South Africa has immense hidden potential. With its affordable cost of living and availability of technology, the country should be a hub for startups from emerging markets. It currently has challenges around bureaucracy and lack of funding, but this could be addressed by following the model of Western Europe, where corporations incubate startups, which reinforce their attractiveness for investors.
With its efficient financial regulation and world-leading corporate governance, South Africa should also be promoting its position as financial hub – although, again, it needs to reduce bureaucracy and step up its fight against corruption, which has already started and is cause for optimism.
The bottom line: South Africa is facing great challenges, which should not be ignored. But the competitiveness rankings suggest a hidden potential that could shape a bright future.
By: Dr. Hischam El-Agamy
This article was first published by After 12