BRICS leaders (l-r) Dilma Rousseff – Brazil, Vladimir Putin - Russia, Manmohan Singh - India, Hu Jintao - China, Jacob Zuma – South Africa (XINHUA)

South Africa's invitation to the BRICS club back in December 2010 – arguably President Jacob Zuma's greatest foreign policy success – has by association positioned the country as a "leading" emerging market economy. While some still question the inclusion based on economic merit, South Africa has become an active member looking to shape the grouping. South Africa is looking to leverage the advantages of this association with particular focus on collaboration opportunities for Africa's development.

As preparations are underway to host the Fifth BRICS Summit, aptly themed The BRICS and Africa – Partnership for Development, Integration and Industrialization at the end of March 2013 in Durban, what will the outcomes of the deliberations entail for the evolution of the BRICS grouping, South Africa and also the greater continent?

Last year in New Delhi at the Fourth BRICS Summit, the grouping already solidified its position on Africa in the Delhi Declaration, something which is expected to be built on further this year. In this context, it is suggested that particular focus will be placed not only on international foreign policy, but just as much on developmental issues, joining forces to understand how the grouping can enhance the development of other regions. As such, the BRICS club could be a piece in Africa's regional integration and industrialization puzzle.

Banking on BRICS

Given a greater developmental focus on developing regions by the BRICS, coupled with an unsatisfying track record of the Bretton Woods Institutions addressing the needs of these countries, one key expected outcome of the upcoming summit is the establishment of the BRICS Development Bank. The bank is speculated to launch with starting capital of about $50 billion, and could add credibility to what has to date been largely a political platform of discussion.

Over the past year a working group of the five countries has studied the feasibility of this bank. Should this come to fruition, the bank could be a first building block in solidifying and institutionalizing the BRICS grouping. The bank could also be a player in supporting larger scale cross-border infrastructure projects in Africa, financially and strategically supporting Africa's regional integration agenda and assisting the grouping in playing a more active economic role on the continent. Whether the bank is launched or not, the five BRICS "reference" banks, including the Development Bank of Southern Africa (DBSA) in South Africa, have committed to exploring opportunities of co-financing "green economy" projects and supporting infrastructure delivery in the continent that would promote integration efforts, increase the continent's competitiveness and contribute toward unlocking regional value chains and value creation for African markets.

Standing out in this grouping is China, particularly in light of its approach and focused inroads into the African continent and with a similar focus on financing major transport, power and communication infrastructure projects and investing in productive sectors such as manufacturing and agro-processing, as well as promoting trade and investment opportunities in an array of sectors. The country is arguably the most proactive amongst the BRICS in unlocking Africa's competitiveness in search of new markets and more cost-efficient production sites, but also finding access to natural resource supplies. However, a more balanced and diversified China-Africa relationship is still needed. Similarly, "win-win" type partnerships between other BRICS and Africa will need to be more actively pursued. It will be interesting to see how the forthcoming summit will address some of the issues of engaging Africa as a partner instead of a mere supplier region.

BRICS Business Council

In this light, another expected outcome of the summit is the launch of the BRICS Business Council. As the political platform has been set for cooperation, greater efforts still need to be made at exploring how to improve business ties among the BRICS, and between the BRICS and Africa. Already, the past decade of globalization has been characterized by a dramatic increase in intra-emerging market trade. The BRICS now accounts for nearly one fifth of global trade. Similarly, trade corridors between the BRICS and Africa have exploded between 2000 and 2011, particularly between China and Africa. China is firmly positioned as the continent's largest trade partner and financier in recent years, and BRICS countries have made an effort to solidify their footprint and influence on the continent. While trade growth has supported the economic performance of these countries, this has also been disruptive for manufacturing sectors within the BRICS, including South Africa, but also within other African countries. This comes as no surprise. The BRICS are economic competitors and first and foremost will look to achieve benefits for themselves, whether these benefits are in their relations with each other or with other economies, including African economies.

Greater facilitation of business among companies of the BRICS countries will be supported by instruments that are already under implementation, such as currency swaps and local currency trade deals. However, this will need to be supplemented with knowledge and information sharing to increase the depth and scope of businesses involved in intra-BRICS commerce and the BRICS-Africa corridor, as well as the gaps that exist in terms of collaboration opportunities for small and medium-sized enterprises (SMEs).

SA gateway to Africa

As South Africa embarks to chair the BRICS grouping in 2013, it continues to eagerly position itself as both a political and economic gateway to Africa. But the African powerhouse will need to strategically marry its regional and international political clout with pressing domestic developmental challenges. It has become clear that simply associating with the big emerging market economies does not guarantee a free pass to high economic growth and resultant development.

In fact, a uniting factor for each of the BRICS, despite their structural differences, is a challenge these countries have in common, although on different scales, as well as the knowledge transfer and best practices that can be shared amongst their peers as these economies modernize, urbanize and further industrialize. Each country has unique competencies and strategic availabilities and it will be important to decrease the level of self-sabotage amongst the grouping, despite competition among them. Tangible results and ultimate success of the grouping will need to be underpinned by increasing commercial ties. Similar linkages will need to support the developmental rhetoric coming from the grouping toward the continent. Otherwise this grouping will become yet another political talk shop. CA

(Hannah Edinger is head of Research & Strategy at Frontier Advisory)