Mainly due to demographics and work age populations, might African countries have a chance of becoming the new “BRIC” nations ? Jim O’Neill, chief economist at Goldman Sachs, who coined the BRICS acronym thinks so.
The visit by South Africa’s President Jacob Zuma to China this week with a large entourage of businesspeople and officials has understandably drawn a lot of comment. He is no doubt keen to promote close ties with Beijing, which just last year rose to become his country’s largest trading partner. It is against this background, with a number of African nations appearing to have escaped the hang-over from the global credit crisis, that increasingly I am asked whether the “s” in Brics may be worthy of becoming an “s” for South Africa – and whether Africa collectively should be thought of as having the same bright future as the Brazilians, Russians, Indians and Chinese in that group?
After South Africa’s successful hosting of the football World Cup more and more people are focusing on the opportunities of Africa. The continent’s combined current gross domestic product is reasonably similar to that of Brazil and Russia, and slightly above that of India. Moreover, of the “next 11” countries – as my colleagues and I have dubbed the group of populous emerging countries after the Brics with the most promising outlooks – two are in Africa: Egypt and Nigeria. In this context, and as South African officials talk enthusiastically about their aspirations for a quasi-Bric status, I have been giving further thought to Africa’s potential to become a Bric-like economy.
If you were to think about Africa collectively, and consider it in the same framework that informs our 2050 scenarios for the Bric, next 11 and other major economies, you would see an economy as big as some of the Brics. If you then look at the potential of the 11 largest African economies for the next 40 years (by studying their likely demographics, the resulting changes in their working population and their productivity) their combined GDP by 2050 would reach more than $13,000bn, making them bigger than either Brazil or Russia, although not China or India.
Interestingly, nearly half of this GDP would originate from Egypt and Nigeria, so the progress of those two nations is crucial to the continent’s potential. Among the other 11, South Africa has a critical role to play as it is more developed than the others, and also somewhat of a gateway to southern Africa. South Africa itself however does not have enough people – just 45m – to be a Bric in itself. But Nigeria, at 180m or more, is not far off 20 per cent of Africa’s population. It could, if it got everything right, be bigger than any of Canada, Italy or South Korea by 2050.
If Africa wants to be thought of as a Bric it should not be as hard as it is often made out. We maintain an index of 13 different variables that are critical for sustainable growth and productivity. We call this our Growth Environment Score (GES), and estimate the data annually for nearly 180 countries around the world. The scores can range from 0 to 10, with higher scores indicating higher productivity or sustainable growth. Of the next 11 countries, South Korea has a score of 7.4, the highest, a level consistent with the best of the developed world. Nigeria has a score of 3.5, the second-lowest.
This might seem bad, but for the four Bric economies the score is only 4.9. For the 11 African countries, the average score is 3.5. So to achieve their 2050 potential, the African countries have to raise their scores significantly. Stable macroeconomic policies focused on low inflation and avoiding excessive government and external debt are perhaps the easiest targets. Among the micro components, we identify the stability of government, improving the rule of law, improving the most basic levels of education, spreading the use of mobile telephone and internet – there have already been impressive developments here – and perhaps most importantly eradicating the chronic corruption seen throughout many African nations.
South Africa demonstrated it was a worthy host for the 2010 World Cup. Now it is up to Africa’s major countries and their leaders to build on this. Let us hope an idea such as muzzling media coverage, a current proposal of South Africa’s ruling African National Congress, does not become law. This would be a step very much in the wrong direction. Transparency and helping to foster an environment conducive to business are what Mr Zuma and other African leaders should be concentrating on. Otherwise the dream of an African Bric will remain just that – a dream.
South Africa wants to become part of the Bric nations. In Beijing, Jacob Zuma showed his draft application letter for Bric membership.
South Africa wants to be considered among the leaders of the developing world along with Brazil, Russia, India and China, its president said Wednesday, pushing for membership of a grouping that has growing global influence. President Jacob Zuma told reporters during a state visit to China that South Africa has discussed its interest in joining the informal grouping of the four major developing nations, known as BRIC, with each member government.
The four nations work to boost trade with each other and have called for developing countries to have bigger role in major global financial decisions, primarily within institutions such as the International Monetary Fund.
Some analysts expect the combined economies of Brazil, Russia, India and China to be larger than the Group of Seven developed economies that includes the U.S. within 25 years if not sooner, making them the dominant global force in everything from trade to finance.
Zuma has already visited Brazil, Russia and India to lobby for a role in the group, which could help raise South Africa’s political and economic clout.
“We believe they will take a favorable decision,” Zuma said. “We think that the BRIC expresses a very important grouping in a changing world today.”
Zuma said there is currently no African member in the informal group. South Africa’s “participation in BRIC would mean that an entire continent that has a population of over 1 billion people is represented,” he said.
China’s foreign ministry had no immediate response to Zuma’s comments.
South Africa´s economy is too small to be considered a Bric. The size of the economy and population of South Africa is similar to Argentina or Colombia, so if South Africa joins so should be Colombia and Argentina.
My take is that Bric will soon become an ideological-political beach head especially for China & Russia, that South Africa really has to think twice about what this would mean in the long run.