Look out here come the BRICs

By Asoka Ranaweera

The writer is the founder and CEO of a company that advises investors on structuring investments and developing projects in West, East and Central Africa

Consider this; according to African Investor, in 1990, total trade between Brazil, China, Russia and India (BRICs) and African countries stood at a mere $8 billion, and that by 2008, trade between them totaled a whopping $166 billion and we know that something is definitely stirring.

According to the International Policy Institute, Chinese trade with Africa increased from $3.5 billion to $100 billion between 1990 and 2008, while Brazilian trade increased to $28 billion, with most of this increase occurring from 2003 onwards.

Russia, similarly increased its trade with Africa largely from 2003 onwards following a prolonged absence in the wake of the collapse of the Soviet Union to approximately $5 billion, while India stepped in by making up for the rest of the difference or in value terms approximately $20 billion.

The relationships between the BRICs and Africa has grown exponentially between 2000 and 2008, which of course coincidences with the ascendency of China and India in particular, and of Brazil and Russia in general. The advent of the global financial crisis, which had potential to disrupt the growth of this relationship, has instead led to its strengthening.

Africa’s traditional reliance on bilateral aid has stood on shaky ground since late 2008, and investment flows from the West have been sharply reduced. The BRIC’s led principally by China have stepped into the void and have taken up the slack to the benefit of many African’s.

BRIC’s have continued to grow, with China and India in particular rapidly urbanizing, increasing demand for a variety of mineral and natural resources that Africa has in abundance. Brazil and Russia, whose rise has also been driven by generous endowments of natural resources, have been increasing their commercial and political ties in Africa for a number of reasons including expanding markets for their own companies.

Based on present forecasts of economic growth for the BRICs in general but China and India in particular, the trade and commercial relationship between Africa and them will grow exponentially and well into the future. For Africa and Africans BRIC involvement in the continent is a potential game changer.

African countries should focus beginning regionally and then continent wide on working together to find common positions on issues of mutual concern in the trade and investment relationship.

Currently, Africans are more disunited than they are united and this allows the BRIC’s to play of one country against the other. By coming together they can get a better deal for themselves by (a) defining better terms of trade and, (b) gaining greater access for their products and services to BRIC markets, particularly, trade that has more value added attached, (c) ensure that natural and mineral resource projects are structured to generate greater domestic employment and (d) to ensure that BRIC’s truly represent Africa’s interests wherever possible internationally.

Its important for Africans to realize the importance of the continents mineral and natural resources to global economic growth including in Europe and the United States. African’s will and do have greater choices about whom to work with and they should use this to their advantage. Leveraging the dynamic between the BRIC’s, Europe and the United States will be one of the future keys to Africa’s success.

One of the main obstacles Africans face in getting better investment and trade terms for themselves is the lack of confidence in their ability to succeed, which is in part driven by disunity, with 53 odd countries spanning this vast continent. Importantly, Africa’s track record of Pan African cooperation on trade and investment is relatively poor. Many African countries have better trading relationships with their former colonial adminitrators than they do with each other. Finding common ground has been difficult.

However, driven in part by the rapid rise of several well to do African countries since 2000, there is a growing chorus of voices; political, academic and social that is driving the impetus for African’s overall to change their perspective in order to take advantage of the new emerging global economic and political reality.

In particular this call for change recognizes that Africans have a unique once in a generation opportunity to seize the moment for the betterment of it’s people, erase past injustices and to make the continent a stronger player in the international political economy.

The window of opportunity remains open but it is unlikely to remain open for long; without Africans stepping forward to define their self interests, if they do not, they may well succumb to a new form of neo-colonialism, which will be a great disservice to its people and development, as the BRICs collectively will be the new investment and trade force to be reckoned with for a long time to come.