Agbiz warns of widening BRICS trade deficit, calls for more ambitious economic agenda

The Agricultural Business Chamber of South Africa (Agbiz) has raised concerns about the growing trade imbalance between South Africa and its BRICS partners, warning that the bloc has delivered limited economic benefits in its current form.

According to a recent article, South Africa’s trade deficit with its BRICS partners has widened by $9.6 billion (about R157 billion), highlighting structural weaknesses in intra-BRICS trade.

Wandile Sihlobo, Agbiz’s chief economist, on Monday said the grouping’s economic potential remains largely untapped.

“The exception is China, with which South Africa has deeper trade relations, though more could be done in agriculture and other sectors of our economy if we had a free trade agreement,” he said.

Sihlobo added that the path forward for this challenge is not necessarily to abandon the BRICS bloc, but to elevate its economic ambitions.

“BRICS remains a loose, informal grouping with no sound economic or trade approach that keeps the countries together. This is what we should be focusing on, instead of attempting to dismiss the grouping and view it as useless.”

Sihlobo said that due to the lack of a formal trade arrangement, the BRICS countries tend to trade more with countries outside the group.

“We see higher tariffs remaining on various products within the BRICS. In fact, when one considers intra-BRICS trade, it quickly becomes clear that little is happening within the grouping beyond political matters, with China again being an exception for many countries on trade.”

Sihlobo added that the constraining factor, as a result of the lack of a BRICS free trade agreement, is the observation, made by the article and others before, that exports and investment in this region are low.

“Thus, questioning South Africa’s continuous involvement. Indeed, much of South Africa’s economic relationships and investments are with the Western world. But let us be frank, South Africa doesn’t have the luxury of choosing either-or in trade matters. We need friendships across the world.”

Sihlobo said that as South Africa, our approach to trade should be to balance and retain our existing trading partners in Europe, the Americas, and other parts of the world, while simultaneously pushing for an ambitious trade agreement within BRICS and exploring ways to attract investment.

“Our focus should be on bettering South Africa by skilfully navigating the complex geoeconomic environment of the day.”

Sihlobo added that in essence, we should (economically at least) reach out to and be friends with all who want to do business with us. India, by the way, is likely to be a global growth engine for the next two decades or so as its per capita GDP catches up. “So, deepening trade is key to long-term progress.”

Sihlobo said that in today’s environment of rising geopolitical tensions and trade friction, this may be the better path of navigating the complexities: more friendships. “Other BRICS countries also need to buy into this story of elevating the grouping’s economic ambition. This is key for the long-term sustainability of BRICS.”

Dr Stavros Nicolaou, a Council Member of the South African Chapter of the BRICS Business Council, recently said that cooperation between South Africa and China was setting "new benchmarks for South-South collaboration" and driving a shift from resource extraction to value-added industrial growth.

“Our cooperation under the Belt and Road Initiative shows that emerging economies can lead with innovation, inclusivity, and purpose.”

Nicolaou added that South Africa is increasingly being positioned as a gateway for Chinese firms expanding into Africa.

“Chinese firms are diversifying into Africa, and South Africa offers a platform with strong logistics, financial, and skills advantages. We are seeing early signs of localisation in manufacturing that can boost employment and technology exchange.”

BUSINESS REPORT