Summary: Jim O’Neill, Chairman Goldman Sachs Asset Management, misread the tea leaf that South Africa will not be accepted into BRIC because of her relatively small population of 50 million and $287.2 billion GDP. But population is not everything as it has been proven with the entrance of South Africa into BRIC. South Africa a gateway to Africa is the largest and most developed economy in Africa. With relatively less corruption and with strong democratic standing coupled with durable civil and social infrastructures makes SA attractive to BRIC.
Jim O’Neill of Goldman Sachs, who coined the term BRIC, was not reacting favorably on the formal invitation of South Africa to join BRIC. The invitation was extended to South Africa by China a member of the BRIC. These nations named BRIC comprises of Brazil, Russia, India and China. The BRIC are the largest and most powerful emerging economies.
Even before South Africa was invited to join BRIC, Jim O’Neill read the tea leaf incorrectly and made the prediction that South Africa was not the right candidate for BRIC membership. He further predicted that Nigeria will make it to BRIC before South Africa. Both of his predictions never materialized and the grip he thought he has on BRIC was waning. Now he is sounding like he knows what is more important to the BRIC than the member nations.
Jim O’Neill did not wait for the ink of the invitation card for South Africa to dry before he commenced to give every reason why South Africa is not the justifiable candidate to make it to BRIC. He made the claimed that South Africa was invited for political reason and not economics. His words: "When I created the acronym, I had not expected that a political club of the leaders of the Bric countries would be formed as a result. In that regard, the purposes of the two might be regarded differently." This statement makes him to sound like a mercantile economist of 18th century. Jim O’Neill needs to take a class in political economy and to review Adam Smith’s Wealth of a Nation. He should come into 21st century and understand the prevailing and the emerging state capitalism. Politics has never been divorced from economics in 21st century capitalism.
Jim O’Neill, Chairman Goldman Sachs Asset Management Photo:Telegraphy
Jim O’Neill commented on the GDP of South Africa which is about $287 billion and said, that South African economy is “quite small by not only BRIC standards, but compared to some others. For example, Russia is around $1,600 billion, nearly 5 times larger than South Africa. And, India is currently similar in size to Russia. Brazil is currently closer to $2,000 billion in size, while China is considerably larger at around $5,500 billion.” His omission is that South Africa has a great potential and it is a gate way to Africa. Looking at the GDP of South Africa will not tell you the whole story about the country. The country is natural resources-rich and Africa has a vast arable soil for cultivation and agriculture. Moreover, South Africa’s debt-to-GDP ratio 29.50 % is among the lowest in the country’s category compared to Greece with debt-to-GDP ratio of 125 %.
All those raising voices on South Africa invitation into BRIC do not know more about South Africa than China that made the invitation. The China knows about her interest and where it lies and she is willing to protect her interest. Before China sends out invitation card to South Africa she has done her home work and has contacted rest of the BRIC members. What Jim O’Neill and his opposition camp should have done is to ask the BRIC members why they think that South Africa is the most suitable for membership.
On the population size of South Africa that prompted an initial reason for Jim O’Neill for not rooting for the relatively smaller South African population of 50 million. South Africa can easily increase her population by opening door to willing African neighboring countries to migrate into her country.
Mr. Emeka Chiakwelu is the Principal Policy Strategist at Afripol. Africa Political & Economic Strategic Center (AFRIPOL) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.
South Africa becomes BRIC member
The South African Foreign Minister, Maite Nkoana-Mashabane said that her country has received a formal invitation to join BRIC, reported by the news agency AFP. The BRIC - Brazil, Russia, India and China are group of emerging nations with large and dominating economies in their own corners of the world. The BRIC nations have influencing economic power in each of their economic blocks. For a while the economic experts have been speculating and forecasting that Nigeria will be the first country in Africa to make it to BRIC because of her size and future economic growth.
While Nigeria was sitting down occupied with lethargy and internal politics, South Africa as usual was busy lobbying for a membership into the league of the largest emerging economies BRIC. Now South Africa has made it and has become the first and only African country that has made into the advantageous and prestigious economic group. Nigeria’s finance minister, Olusegun Aganga has just dropped the ball this time and has shown lack of leadership in this issue. Aganga is a respected voice in the financial world, and should have used his influence and prestige to lobby for his country. Africa should be proud of South Africa for trying to better her country but Nigeria must also catalyze her economic progress by getting involved and not waiting for things to be handed to her. Nigeria must be proactive and must make the intrinsic initiative to lead and to get involved.
Leaders of the BRIC countries--Brazil, Russia, India and China
"Chinese President Hu Jintao also issued a letter of invitation to (South African) President Jacob Zuma to attend the third BRICS leaders' summit, to be held in China in the first quarter of 2011. China in its capacity as rotating chairperson of the BRIC formation, based on agreement reached by the BRIC member states, invites South Africa as a full member into what will in future be called BRICS” according to SA Foreign Minister Nkoana-Mashabane .
“The BRIC countries are not formally linked but have held summits and taken steps to boost financial cooperation and investment opportunities among them. The group held its first formal summit in Russia last year. She said she received a phone call on Thursday from Chinese Foreign Minister Yang Jiechi informing her of the invitation to join the group, whose current members will account for 61 percent of global growth in 2014, according to the International Monetary Fund.”
Jim O’Neill, Chairman Goldman Sachs Asset Management, misread the tea leaf that South Africa will not be accepted into BRIC because of her relatively small population of 50 million comparing to Nigeria’s 150 million. But population is not everything as it has been proven with the entrance of South Africa into BRIC. South Africa is the largest and most developed economy in Africa. With relatively less corruption and with strong democratic standing coupled with durable civil and social infrastructures makes her attractive to BRIC. Nigeria will not only rely on her population as the only factor to be recognized as an emerging power, she must work aggressively to develop a disciplined and diversified economy.
Prior to this development, Kingsley Ighomwenghian of Agency Report, commenting on South Africa and Nigeria membership quest in BRIC, wrote: “The BRICs are some of the world’s fastest growing economies, to which according to Reuters, quoting Russia’s President Dmitry Medvedev, South Africa had “applied” to join in. Others eager to join the club include Turkey, Mexico and Indonesia, which investors typically eye as possible additions to the BRICs, having grabbed a chunk of emerging market investment in recent years due to their scale, growth and impact on the global economy. “
Nigeria has been favored over South Africa because of her large population and her bulging GDP. Nigerian economy has been growing at about annual rate of 7.8 percent and even expected to grow up to 10 percent with the future upgrade and improvement of electricity. Razia Khan, an African research expert at Standard Chartered joined the debate by predicting that Nigeria’s economy may overtake and supersede South Africa’s by 2023 and “in the next five years, Nigeria will add another 23 million people and South Africa will add another 2.8 million.” Even with all the Nigeria’s advantage, the well organized South Africa made it to BRIC before her.