India & South Africa must take advantage of BRICS for mutual trade benefit: SA Minister

Jayarama Emani | The Dollar Business

The Sixth Investment & Trade Initiative by Republic of South Africa in Hyderabad on February 23, 2015

  “Recent reports indicate that we are in the era when there are tectonic shifts in the global economy. The emerging economies have become the new centres of economic growth. Our regions are destined to become global economic power centres. BRICS in particular is in forefront of the leading economies of the future. And therefore, India and South Africa must take advantage of BRICS membership and do more business with each other,” said Mr Mzwandile Masina, Deputy Minister of Trade & Industry, Republic of South Africa. Speaking to The Dollar Business, on the lines of a seminar during the sixth edition of Investment and Trade Initiative, India programme designed to assist South Africa’s small and medium companies to interact and do business with their Indian counterparts, Mr Masina said that this seminar is taking place at time when the world economy is still facing tremendous challenges and is performing under capacity. “In 2014 we saw a disappointing Global growth of 2.6%, however, on positive note World Bank has projected global growth of 3% in 2015 and 3.3% in 2016. Therefore, in light of global challenges more trade and investments should be at the top of our agendas because it would contribute to create more jobs and growth when we need it the most,” he said. Stating that the trade between the two countries has been growing significantly for the past decade, Masina said that India has been benefiting more than South Africa. The reason he said was because of South Africa’s export basket being dominated by commodities/raw materials, while imports from India are dominated by value added products. This type of trading relationship cannot be sustainable in the long run, he added. According to statistics, total trade grew from R80.9 billion (USD $7.7billion) in 2013 to R90.3 billion at end of 2014. Out of this South Africa exported R40.9 billion (USD $3.9billion) and imported R49.4billion (USD $4.7billion) goods from India during 2014. Products mainly exported were coal, gold, iron and steel, inorganic chemicals and ores. Whiles imported products were mainly of petroleum products, motor vehicles and pharmaceutical products.   “We are concerned about composition of our exports to India and need to address it soon,” Masina said. Between January 2003 and June 2014 a total of 70 FDI projects from India were recorded in South Africa. These projects represents a total capital investment of around R34.5 billion (USD $3.29billion) which is an average investment of R491.97million (USD $46.86) per project. Significance numbers of jobs around 9,184 jobs were created. From South Africa’s side, between January 2003 and January 2014 a total of 18 FDI projects to India were recorded. These projects represent a total capital investment of R4 billion (USD380million) which is an average investment of R222.07 million (USD$21 million) per project. Twenty nine (29) South African companies are participating in a business-to-business interaction post the seminar. These companies are in the following sectors namely - Agro processing, Chemicals, Mining equipment, Renewable energy and Infrastructure and Construction.  

This article was published on February 23, 2015.