The trade deficit between South Africa and its Brics partners has grown by $9.6bn, research shows.
The findings call into question the nature of the country’s continued participation in the bloc it joined in 2010.
Conducted by top academic Bhaso Ndzendze, a professor of politics and international relations at the University of Johannesburg, the study calls for a Brics treaty to be established to eliminate tariff and non-tariff barriers.
“Looking at the period between 2010, when South Africa first entered Brics, up to 2024 points to three trends. The first is that South Africa has had a deficit, and that this trade position has not changed over the 14-year period,” the research paper says.
“Second, the deficit has been growing. It has widened continuously, growing from $3.6bn in 2010 to $13.2bn in 2024.
“Third, when compared with the EU and the US, the Brics deficit is out of proportion. Indeed, South Africa enjoys a narrowing deficit with the former and a surplus with the latter.
“Bric-bound exports from South Africa have grown by an average of 11.49% a year since joining in 2010. However, Bric countries are not importing South Africa’s manufactured goods at a significant rate since joining.”
The study, which compares trade gains made by South Africa from its Brics membership since 2010, was published in the Asian Review of Political Economy, a research journal that publishes research in the fields of political economy, finance, trade and investment.
Bric countries are not importing South Africa’s manufactured goods at a significant rate since joining.
— Research paper
The research reviews a dataset consisting of exports and imports to and from the Brics countries in 2010-24 through a trend analysis and a comparative trade balance analysis.
The study also draws on the South African Revenue Service (Sars) as well as the UN’s Trademap database, with a particular focus on South African exports to the respective markets and balance of trade therewith.
The findings present a dilemma to Pretoria, which has moved closer to Moscow and Beijing than Washington.
One of the findings is that South Africa’s exports to Brics partners were primarily raw minerals and agricultural produce.
“None of the four countries imports South Africa’s machinery and vehicle offerings at any meaningful level, for example,” the study notes.
With the data pointing to an asymmetrical trade relationship between South Africa and the original four Bric countries, the research paper calls for a review of the tariff rates applied by each member to all the other members, including South Africa.
“We can deduce that South Africa’s average tariff rate towards Brics is consistent across all members. It is also the lowest, being less than half of the lowest average tariff among the other members (Russia’s 10.3%) at 4.9%,” the paper says.
SA a ‘clear outlier’
“This makes South Africa a clear outlier in terms of openness towards fellow Brics members. For South Africa, however, a Brics-Plus treaty is clearly needed to realise gains from membership in light of the imbalanced trade.”
According to a fact sheet on the benefits of South Africa’s participation in Brics, published by the department of trade & industry, the country has reaped great benefits from the bloc.
According to the fact sheet, bilateral trade has grown, particularly with China and India, with commodity exports and manufactured goods imports featuring strongly.
South Africa’s overall trade with its Brics partners has increased by an average growth of 10% in 2017-21, according to the document, with total South African trade with Brics having reached R830bn in 2022 from R487bn in 2017.
With South Africa’s diplomatic relations with the US at their lowest ebb since the height of apartheid, trade with Brics countries and intra-Africa trade is crucial to sustain the economy.
In 2001 Jim O’Neill, an economist at Goldman Sachs, formulated the acronym “Bric” while explaining that he believed the next wave of growth would come from emerging markets such as Brazil, Russia, India and China.
The name changed to Brics with the inclusion of South Africa, Africa’s most industrialised economy. South Africa, the smallest member in terms of economic clout, joined Brics in 2010. The argument for South Africa’s entry was based more on diplomatic logic than on the size of its economy and population.
The bloc, which accounts for more than 45% of the world’s population, was recently expanded to include Ethiopia, Egypt, the UAE, Saudi Arabia and Iran.
In an era when foreign policy is partially made by various government departments, there is potential for the dilution or undermining of South Africa’s Brics-Plus participation.
— Research paper
South Africa’s trade deficit with China has ballooned over the years, despite total bilateral trade with the world’s second largest economy having soared from $1.34bn in 2000 to $34.18bn in 2023. The imbalance is largely due to South Africa exporting primarily raw materials to China and importing mainly manufactured items.
Ndzendze’s research says a Brics-Plus treaty or trade agreement would make the association more clearly defined, predictable and formalised, which is required for economic planning.
“In an era when foreign policy is partially made by various government departments, there is potential for the dilution or undermining of South Africa’s Brics-Plus participation.”
South Africa will host a naval exercise from Friday to January 16 with several Chinese, Russian and Iranian naval vessels.
China will lead the exercise, the SANDF said.
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