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BRICS Business Forum in South Africa

Tuesday 9 April, 2013

I slipped into the BRICS Business Forum in Durban, South Africa (SA) the day before the momentous signing day of the BRICS Summit.  The business forum obviously had much more of a business focus than the ceremonial summit, so that was time much better spent for me.  It looked like there were about 2500 attendees, which was supposedly ½ of those attending all BRICS events.

I arrived a few minutes late to a talk being given by SA’s Minister of Trade & Industry, Rob Davis.  He emphasized how much SA must industrialize & encourage development of a  services-based economy, including information technology services.  Davis pointed out that despite that fact that SA does not have the large domestic markets the other BRICS countries do, SA offers access to many other countries in Africa, partially through it’s membership in trade blocs, SAFTA, SADC, & EAC, which are supposedly doing more than just reducing tariff barriers.  SA is seeking partnerships to strengthen its production activities.

The Brazilian Minister of Foreign Trade let us know that Brazil will host the BRICS summit again next year & that Brazil has the largest population of Africans outside of Africa.

Russia’s economic minister spoke, but it was in Russian & my simultaneous translation device was not working correctly.

The Chairman of India’s Chamber of Commerce & Industry, a very influential organization in India, & minister of commerce & industry, Annan Sharma was up next.  He noted the connections between India & SA by making us aware of Mahatma Gandhi’s travels to Durban & Peitermaritzburg.  India is working on a pan-African e-network project which is linking key universities & hospitals.  The project is a gift from the government of India.  To contribute to institution & capacity building, India has welcomed 50K students into its schools. It is forming 17 institutions in Africa, including the Indian-African Institute of Foreign Trade, which will institutionalize the framework for trade & investment.

China’s vice-minister of commerce spoke in Chinese with a bad simultaneous translator again, but I was able to decipher that he made 4 propositions:

  1. Strengthen the international trade & economic order with macroeconomic policies, complete the Doha round of negotiations of the WTO, & safeguard developmental rights.
  2. Direct & focus on cooperation among BRICS countries to maximize their competitive advantages
  3. Intensify investment & promotion
  4. Promote finance, IT, the environment, & SME’s.

BRICS-Africa panel with panelists from Brazil, India, & SA.  SA led off by informing us that SA has the world’s largest radio telescope, which is probing the outer edges of the universe.  It can undo 3k 15” satellite dishes & is 50X more sensitive than it’s nearest competitor.  This provides opportunities in research of high-level technologies & in construction of satellite dishes in SA.  China & India are already members of this 10 member-country international project.

Brazil has been investing in biofuels for 40 years & has the most flexible-fuel cars.  Agrobusiness is huge in Brazil & Brazil leads in the trade of ethanol.  Sudan has implemented Brazilian technology in this area.  This is an example of a positive approach to international cooperation.  The Brazil space agency has experience in working with the Chinese & is offering imaging technologies to SA.  They suggest the way to keep fuel prices low is to focus on clean fuel, simplify complex tax structures, & keep the price of ethanol below that of oil.

India seeks deeper engagement with BRICS countries & believes the key to success is the transfer of technologies.  African countries hold 50% of the world’s resources (I’m not sure which 1’s) & an environment with a free flow of people, goods, & services needs to be created.  India has the workers with construction skills & training-it’s industrialization level is 42%.

CNBC hosted a debate, but it might not have aired yet-here is all I could find  http://www.cnbc.com/id/15840232/?video=3000157571&play=1

The afternoon was completed by an infrastructure breakout panel & the signing of a number of Memoranda of Understanding.  The panel jumped right in to explain how BRICS can help the rest of the continent of Africa.  They’ve invested 4 trillion South African Rand, are working on a World Economic Forum project in Ethiopia, & encourage a focus on localization.

LinkAfrica hired consultants from the US, Terabit consulting, to do a study on fiber optics & the last mile terrestrial connections in Africa.  They signed an MOU with other BRICS countries for foreign trade to create communications on a south-south basis with no northern hubs.  This gets access for BRICS countries to 21 countries in Africa.  Their plan is to build data centers with access to the cloud in Africa.

Brazil’s representative indicated they’ve been in Africa since 1983 & are now active in 14 countries on the continent.  His take was we need to improve the infrastructure network to feed the world.  They are doing that by investing $445B by 2015.

Russia’s Renwa Group has been working in South Africa for 7 years.  Their constraint is in infrastructure in ports.  Their costs double when they must ship their goods 200km from Port Elizabeth to Durban’s port; transportation costs are double their extraction costs.  South Africa’s electricity monopoly is ineffective because electricity costs have risen to 12% of their Gross Margin, & forecasted to become 16% in the next 5 years.

India’s representative indicated that South Africa is India’s 4th largest trading partner.  The Delhi-Mumbai corridor will have $100B invested in it in the next 20 years as 400M people will be moving there in the same time frame.  They are investing $1Trillion in the next 5 years. & seeking $500B from investors right  now.  They privatized their airports 10 years ago, & now they are some of the best in the world.  They are investing in infrastructure funds in a big way.

China’s representative from ZTE was hindered by bad simultaneous translation again.

Pardon the lack of detail in specifics on the speakers, etc.  I tried to snag a program with an agenda but couldn’t pull it off.  I asked the organizers but the bureaucrats have been unresponsive.

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