China-Africa trade tipped to reach record high this year

accession to the ranks of BRIC, an economic coalition of top emerging nations China, India, Russia and Brazil, has become a hot debating potato. And caught up in the midst is economist Jim O’Neill, chairman of Goldman Sachs Asset Management, and the man who coined the ‘BRIC’ acronym a decade ago. His reaction has been downright negative in arguing against South Africa’s acceptance on the grounds of a relatively small economy (US$285 billion or R1.8 trillion) in comparison with the four sitting members, a much smaller population (about 50 million) and tepid GDP growth of about 3% this year. That said, South Africa is the economic powerhouse of Africa which is clearly a major factor behind South Africa’s acceptance. The proponents of the idea suggest South Africa, the world’s 31st largest economy (World Bank 2009), is a ‘natural fit’ to go along with emerging nations such as Brazil and Russia while the negative camp, O’Neill included, says Nigeria is rather the country with ‘real potential’. Marvin Zonis, professor emeritus at the University of Chicago Booth School of Business, sees the Chinese move as part and parcel of a keen desire to enhance its presence in Africa. Trade between China and Africa stood at US$115 billion at the end of November and is tipped to reach a record high this year. This led analysts to suggest it would only be a matter of time before an African country was asked to join the ranks of BRIC, given such impressive statistics as sub-Saharan Africa’s total economy growing from US$322 billion in 2000 to US$931 billion in 2008 (Source: IMF). Standard Bank data predict BRIC’s African trade will have increased three-fold, to US$530 billion, from the current US$150 billion by 2015 and that BRIC’s share of Africa’s total trade will increase from the current onefifth to one-third in the next five years. Moreover, BRIC’s foreign investment stock in South Africa will swell to more than US$150 billion (from the current approximately US$60 billion) over the same period.