Trade between BRICS countries and Africa has decreased 21% year on year in 2015, according to a report by Standard Bank.
However, Standard Bank senior political economist and chief report author Simon Freemantle puts much of this down to decreasing commodity prices. “Sixty percent of the drop was accounted for purely by the reduction in oil price and the remainder of the drop had a lot to do with other base metals,” he says. “If you look at BRICS exports to Africa, they decreased by a very small margin and in fact Chinese exports to Africa grew year on year.” Mr Freemantle expects trade value to increase only once commodity prices go up again.
He also sees plenty of opportunity for investment and co-operation between Africa and the BRICS countries, although most of this opportunity will be coming from India, China and South Africa rather than Brazil and Russia.
In addition, he does not expect this boom in co-operation to reach the levels of the few years following the global financial crisis, saying that trade will be “nowhere near the levels that we saw in the 2008 to 2013 period and I don’t think there is anyone expecting that it will go back to those levels. The heady days of 20% year-on-year BRICS-African trade growth are gone and we’re not going to see those again”.
Despite the years of extensive trade growth being over, there are still opportunities for investment and co-operation in agriculture, manufacturing, infrastructure and the continued trade of commodities. Mr Freemantle predicts this will largely be fuelled by India, China and South Africa as well as some other emerging markets, such as Turkey.
Mr Freemantle also believes investment could replace exports in increasing economic co-operation between Africa and BRICS. “There might be some domestication of the products and services that they’ve typically exported to Africa, as we’ve seen with India and South Africa and in places like Kenya and Tanzania,” he says. “I think that model will start to be replicated in other geographies. I think that’s the sort of future of not quite BRICS-Africa but India, China and South Africa’s engagements with the continent.”