The new cooperative alliance that includes Brazil, Russia, India, China and South Africa is set to become an economic and political power broker in global markets.

One of the most significant economic and

political courtships over the past two years has

been South Africa’s coming together with Brazil,

Russia, India and China in a cooperative alliance,

now known as BRICS.

This alliance, given the very nature of the

world economy, is going to play a huge role in

influencing events in world markets.

One only has to look at the numbers involved in

the markets that Brazil, Russia, India and China

(BRIC) embraces, to realise the real possibility

of this - they are huge markets by any standard.

These four countries have a combined

population of around 2.85 billion - around 43%

of the present global total - with a combined

labour force of 1.5 billion and an average age

across the four countries of only 29.

Furthermore, Africa, as many economists

have pointed out, is one of the most profitable

areas in which to do business. South Africa,

as an established economy within Africa, and

the only African representative within the

BRICS alliance, will be in a position to lend its

political, economic and other expertise to its

partners.

A gateway into Africa

Membership of this body will open doors for

the other BRICS nations to use South Africa as

a transit route to the rest of the continent.

To its partners South Africa can thus be a portal

into the rest of Africa.

The “gateway” concept is nothing new.

But South Africa is not only a strategic entry

point for other BRICS nations to move goods,

commodities and resources into the rest of the

continent. As an established economy within

Africa, South Africa - as a BRICS nation - can

also lend its political and economic clout, and

its streetwise experience of doing business in

Africa, to the mix.

However, there are other gateways available

for BRICS nations - or other nations for that

matter - to enter Africa for trade purposes.

For this reason, South Africa must not become

complacent. It must capitalise on its good

standing within this body by spelling out the

advantages that other BRICS countries stand

to accrue by choosing South Africa as a point

of entry to the rest of Africa.

africa LegaL Brief series | may 2012

new-look africa set to reap benefits of brics By Greg Nott, Director

This is all the more reason why the South

African government needs to work harder to

remove some of the frustrating bureaucratic

pinpricks that undo much of the good

emanating from behind-the-scenes African

initiatives undertaken at diplomatic and

business levels.

For example one of the issues raised by a

number of presidents at the African economic

forum held in Tanzania last year, was the

negative effect that delays in issuing visas

can have on trade within Africa. It hampers

and impedes logistical transport, trade and

movement of goods and people.

African nations must recognise this, understand

the impediments and move swiftly and

decisively to ease and eliminate these kinds of

bureaucratic burdens.

South Africa’s role in tapping the new-look Africa’s potential

The good news is that Africa’s growth has

shown an upward trend over the past decade,

gaining exceptional momentum recently,

albeit coming off a low base. There is a new

shift in strategy in redefining business on the

continent. It still has its challenges in regard

to poverty, governance and some of the other

age-old concerns, but this is without doubt a

new-look Africa.

Africa, as some economists have pointed out,

is now poised to become an engine of world

growth. The continent has come of age over

the past two years and, in every sense, the

period from 2009 to 2011 has been this new

Africa’s coming out party.

On the wider world stage, it is South Africa’s

policy to be a cooperative member of the

African Union. Certainly at a political level it

projects the impression that it wants to stand

together at international level with the rest of

the continent. Its participation in BRICS will

allow South Africa to project not only its own

standing, but that of its African neighbours and

African union members.

South Africa, of course, is often cast in the role

of “kingmaker” in Africa - witness its success

in conflict resolution, for instance. But one of

the realities of the BRICS alliance is that China

and South Africa stand shoulder to shoulder as

equal partners.

China is South Africa’s largest trading

partner and with that comes a whole host

of advantages, challenges and diplomatic

conundrums. But at the moment, the situation

is one which South Africa is well placed to take

advantage of. Each country has a fine regard

for diplomacy and a recognition that working

together can engender great benefits to both.

Obviously there are concerns about

unemployment among South Africa’s

impoverished population. Hopefully these

concerns will be taken into account when

agreements are crafted. This is certainly

something that must be hammered out by

politicians on both sides.

Away from the political hustling, the telecoms

revolution and the commissioning of the

first undersea telecoms cables is a significant

development in the growth of a new Africa,

because it enables ease of communication. And

with this comes the ability to profile African

markets. The new communication technologies

will open doors and provide access to new

opportunities. It is a huge development that

cannot be overestimated.

BRICS is well set to play the role of one of the

major trading blocs in the world and could

potentially dominate the world economy. Of

course Africa cannot escape the repercussions

of a world economic crisis. It does not stand

in isolation. But it may be in a better position

than most to steer itself to a middle ground.

There are enormous opportunities to be gained

from the needs, commodities and resources

that countries to the west and the east need

to keep their engines alive.

Resources are but one part of Africa’s

competitive advantage. The continent

offers financial services; tourism; transport;

communications; agriculture; construction and

infrastructure; and utilities - particularly energy,

given Africa’s enormous natural resources

of solar energy, wind and hydro-electric

power.

In the field of energy alone, for example, there

are exciting exploration discoveries in gas and

oil in Mozambique and off the Namibian coast.

This itself creates greater cooperation between

countries, from an economic as well as a

political perspective. In turn, business people

are assisted and emboldened by this process.

Conclusion

Today, there are a lot more people dancing to

Africa’s beat and coming to its shores. And

the more people that come, the more easily

risk is mitigated as the bandwagon effect gains

momentum.

The 2010 FIFA World Cup opened a window

on Africa for the world. It was a joyous

occasion, well run and organised, which

brought great happiness. People love these

kinds of stories - and there are plenty more

of them around in Africa.

Afro-pessimism is hard to push back, but

certainly much has been done to paint a

different picture of Africa in the recent

past - and it amounts to far more than mere

air-brushing.

About the Author

Greg Nott Title: Director Office: JohannesburgDirect line: +27 (0)11 535 8136Fax: +27 (0)11 535 8636Switchboard: +27 (0)11 535 8000Email: gnott@werksmans.com

Greg is a director of Werksmans Attorneys. With a high profile in the legal fraternity - both local and international - Greg was instrumental in establishing and building the South African office of a New York based international law firm over a ten year period. During this time he was recipient of a number of awards including the prestigious 2010 International Lawyer of the Year Award from the UK-based Legal Business Magazine. Greg’s business savvy and commitment to pro bono as part of a commercial practice have been highlighted in a diversity of respected global directories. Under his leadership, the firm he headed was recognized as Africa Law Firm of the year by Chambers Global: The World’s Leading Lawyers for Business in 2005 and developed a reputation for excellence in projects and energy. He has a BA LLB from the University of the Witwatersrand.

Established in the early 1900s, Werksmans Attorneys is a leading South African corporate and commercial law firm serving multinationals, listed companies, financial institutions, entrepreneurs and government.

Werksmans operates in Gauteng and the Western Cape, and is connected to an extensive African network through Lex Africa*.

With a formidable track record in mergers and acquisitions, banking and finance, and commercial litigation and dispute resolution, the firm is distinguished by the people, clients and work that it attracts and retains.

Werksmans’ more than 190 lawyers are a powerful team of independent-minded individuals who share a common service ethos. The firm’s success is built on a solid foundation of insightful and innovative deal structuring and legal advice; a keen ability to understand business and economic imperatives; and a strong focus on achieving the best legal outcome for clients.

*In 1993, Werksmans co-founded the Lex Africa legal network, which now has member firms in 27 African countries.

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Nothing in this publication should be construed as legal advice from any lawyer or this firm. Werksmans’ legal briefs should be seen as general summaries of developments or principles of interest that may not apply directly to specific circumstances. Professional advice should therefore be sought before any action is taken. TL

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