South Africa a BRIC contender

Written by on May 18, 2011. Posted in Uncategorised

When South African leader F.W. de Klerk declared an end to his country’s apartheid over two decades ago the country has gone from strength to strength.  South Africa is a far cry from the nation she was then – which her hosting of the World Cup in 2010 was testament of.  As the country continues to develop and progress, its companies are following suit – yet with little interest in stunted Western markets. Instead their interests are vested in fellow emerging nations, especially those within their continent.

Countries like China, an emerging market generating massive demand for raw materials which actually took the place of Germany as South Africa’s biggest trading partner, are proving a more attractive trading associate than any in the West.

Due to South Africa boasting more pan-African companies than any other country in Africa, it is now regarded by many as the corporate leader of Africa. This effectively secures the country’s position within the BRIC economies. While this acceptance does not come without a price – as connections with emerging markets can create a heavy dependence on economies demanding raw material exports – South Africa has little to be concerned about, and for several reasons.

Astute business sense

Firstly, South African companies dealing in financial services, consumer goods and telecommunications have managed to expand their businesses very effectively into other emerging markets.

It is also worth noting that apartheid actually forced businesses to become more creative in order to survive – which involved an element of risk-taking not generally used by their US and European counterparts.

Secondly, because of South Africa’s ethnic diversity and traumatic war torn history, the country is more receptive to different cultures and more pragmatic about business techniques.  South African companies have amassed important business acumen by selling their products to their own emerging middle-class and low-income groups – facilitating the ability to operate in comparable markets elsewhere.

Thirdly, capitalization of the Johannesburg stock market is approximately twice the nation’s GDP. In many other countries, stock market value simply cannot measure up to the yearly output of South Africa’s economy.

Bigger is not always better

South Africa has a relatively small economy, yet the country’s influence within the larger continent gives it substantial influence, making it an attractive partner for the BRIC nations – one of the reasons it joined Brazil and India to form the G3 or Ibsa seven years ago.

In 2010 in Copenhagen, South Africa joined Brazil, India and China in taking an active role in climate change discussions, later forming an entirely new group – BASIC.

While strong economic connections take time to develop, with years of colonial history South Africa is wary of becoming too dependent on any one nation. Yet the ties continue to develop and mature between it and other large emerging economies – something that can only lead on to bigger and better things.

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