South Africa joins Brazil in the BRICs

IT Decisions just returned from a research visit to Cape Town in South Africa, organised by local trade association BPeSA. This trip took place at exactly the same time as South African president, Jacob Zuma, was invited to China to participate in the latest BRICs summit.

With Brazil playing such a key role in the BRICs group, IT Decisions asked other analysts taking part in the research visit to Cape Town what they felt about Brazil, Russia, India, and China admitting a new member to their club. Was it a surprise to them that a relatively small African nation was being courted, rather than another nation with a large population, such as Mexico or Indonesia?

Research vice president for Gartner research Ian Marriott was unsure about South Africa’s determination to compete with such large nations head on.

“They are behind India and China in most respects, and shouldn’t be trying to compete, though attending BRIC summits would give them a useful perspective. They have opportunities to move up to comparisons with Brazil in the longer term, but are so different to Russia that it doesn’t bear comparison.”

Jamie Snowdon, Principal Analyst at HfS research believes that the entry of South Africa into the BRICs group is great for their international image.

“I suspect the BRIC link will be great for publicity and helps them to establish themselves. It gives them a chip at the next table,” he said.

Senior research analyst at IDC Curtis Robinson pointed out that the latest developments around South Africa and the BRICs mean that important structural changes are now taking place.

“It is significant that South Africa is included. You need an offering and you need to be on the radar. I’m not personally focused so much on China and Brazil, but clearly to be at the same table is significant. Now you have companies going global so it’s important for South Africa to be a part of that discussion,” he said.

Peter Ryan, lead analyst for business process outsourcing (BPO) and contact centers at Ovum believes that there is a great opportunity, but in the hi-tech service sector there are still negative perceptions to be beaten.

“It’s food for thought that South Africa has been invited to join the BRICs group. You will find that for most observers, the BRICs are a fairly new phenomenon, but given the activity that is taking place in this group of countries, it’s a real opportunity,” he said.

“Perception of instability and danger is still a real issue in South Africa. Being able to combat the fears that Western business people may have of corruption, carjackings, or kidnappings is important. Though people still need to be careful on the ground,” Ryan added.

Paul Davies, Managing Director of Onshore Offshore added that the new admission is not just about South Africa alone.

“It is significant and appropriate for South Africa to be at the BRICs table.  First, because South Africa is really a gateway to Africa – that alone justifies the invitation to the BRICs table. Clearly they are not in the same league as the existing BRICs, but they do have some industrial advantages when compared to existing members – for example, banking, is very mature in South Africa,” he said.

IT Decisions says

We are reminded of the recent launch of the South-South Inovation Summit in Rio last October when the hi-tech service industries in Brazil, South Africa, and India reached some agreement on how they might be able to work together on international outsourcing contracts.

Entry to the BRICs group is a bigger stage, but South Africa has more tricks up its sleeve than can be seen at first sight. It has the worlds largest set of untapped mineral reserves, still measured in trillions of dollars. But the real advantage, in this era of international economic development, is that South Africa accounts for over a quarter of all economic activity in the continent of Africa.

As Paul Davies said, it suddenly looks like an amazing springboard into the rest of the continent.

The BRICs remains an undefined club of fast-emerging economies – there is no official reason for the club to exist because it is not a formal trading bloc, but if the entire continent of Africa now warms to the BRICs concept via a South African gateway then this could yet be a formidable economic club – with Brazil right at its heart.

Photo by Irene licensed under Creative Commons