1. BRICS – Potential, Opportunities and Challenges –

2. What has happened in the past 20 years?
The world is changing
What has happened in the past 20 years?
Globalisation
The fall of communism
The fall of apartheid
Arab uprising
The fall of the dictator
Environmental changes
Shifts in power

3. The Emergence of BRICS
In 2001 Goldman Sachs executive Jim O Neill in his article “The world needs better economic
BRIC’s” clustered countries at a similar stage of rapid economic development whose assets
were worth investment.
He discovered that Brazil, Russia, India and China fell into this category and accordingly
coined the acronym BRIC.
He did not expect the BRIC countries to form a political and economic club to play a role in
global governance.
He however did not support the inclusion of South Africa in the BRIC summit believing that
the South African economy was not big enough to join the emerging economies club.
South Africa was nonetheless officially admitted into the club at the BRICS summit in Sanya,
China on 13 April Emerging powers were not terribly concerned with GDP as a
qualification. It was concerned in developing the world economic and
political situation and realised that South Africa was
the gateway to Africa.

4. BRICS accounts for more than:
The Emergence of BRICS
While there are many critics that claim that the BRICS initiative is overstated, it cannot be
denied that the BRICS economics are having a huge influence on the world economy.
Over the past 5 years, more than a quarter in world growth has emerged from the BRICS
economies.
It is also projected that by 2050 the BRICS economies will lead world GDP even though they
may not be leaders in GDP per capita
BRICS accounts for more than:
40% of the world’s foreign
exchange reserves;
40% of the world’s
population;
25% of the world’s land area.
Source: BRIC model projections

5. GDP and GDP per capita projections - 2050

6. Economic gravity shifts to Asia

7. China set to take pole position

8. Share of the world
Source: Goldman Sachs
* South Africa not included

9. Growth in middle class in the next decade
Number of People with income over $3000 in the BRICS
Billions
Growth by fourfold
Source: BRICS Model Projections

10. Future Predictions

11. BRICS Exchange rates could appreciate by close to 300% by 2050
Spectacular Potential
Source: BRICS Model Projections

12. Over the next 50 years, Brazil’s GDP growth rate averages 3.6%.
“The Jaguars”
Over the next 50 years, Brazil’s GDP growth rate averages 3.6%.
The size of Brazil’s economy overtakes Italy by 2025; France by 2031; UK and Germany by
2036.
Challenges: lack of openness, lower education levels, lower savings and investment, higher
public and foreign debt.
Lower convergence rate at first, then catch-up with China.
Critical issues: Foreign and public debt constraints; Infrastructure; Openness to trade
“The Brazilian economy is booming. It is hotly tipped to achieve the prestigious Investment Grade as early as next year, and by 2050 Brazil is predicted to have grown into one of the world's largest economies, alongside China, the US, India, Japan and Russia” – Goldman Sachs

13. Russia
“The Bears”
By 2050, Russia’s GDP per capita is by far the highest of the BRICs.
Demographic dynamics drive GDP per capita path.
Russia’s economy overtakes Italy in 2018; France in 2024; UK in 2027 and Germany in
2028.
Critical issues: Life after Putin; The Transition from Oil.

14. India
“The Tigers”
India’s growth rate remains above 5% throughout the period.
India’s GDP outstrips that of Japan by 2032.
India could raise its income per capita in 2050 to 35 times current levels.
Still, India’s income per capita will be significantly lower than other BRIC countries
Critical issues: Openness; Basic Education; Policy Coherence; Environmental issues

15. China
“The Dragons”
China’s GDP growth rate falls to 5% in 2020 from its 8.1% growth rate projected for 2003.
By the mid-2040s, growth slows to around 3.5%.
Even so, China becomes the world’s largest economy by 2041.
High investment rates, tapers off though projection period.
China’s per capita income could be roughly what the developed economies are now
(about US$30,000 per capita).
Critical issues: Financial System Reform; Political Transition, Environmental issues

16. South Africa
“The Lions”
Remains principal gateway to Africa
Continent's leading economy
Sophisticated financial and legal system (ZAR currency highly traded)
Better placed structurally / cyclically than developed countries to weather financial crisis
South Africa’s financial system remains intact, no bailout required

17. + 1 billion people; $2 - $5 trillion; GDP 8% - 10% growth potential
Development stages
India and China
+ 1 billion people; $2 - $5 trillion; GDP 8% - 10%
growth potential
Geographical size – inconceivably massive, 2 out of 4 already major nuclear powers – present a major future world presence / dominance
Russia and Brazil
Russia : 120 million people, Brazil : 190 million people;
Economies + $1 trillion, GDP growth 5% - 6%
South Africa
50 million stagnant population, $0,3 trillion economy
and 3,5% growth potential
Adult
Puppy
New Born

18. Africa
The Emerging GIANT
The African continent has a total annual GDP of US$1.6 trillion in 2008 (McKinsey & Co) – a little higher than Brazil or Russia
$860 billion combined consumer spending in 2008
In 2009 it recorded an estimated 5% growth and thus added US$70 billion to the World economy;
The African continent has over 1 billion people
The continent is more democratic than ever before
Africa’s GDP has doubled in the last century
Trade between Africa and BRICS has been double the global average
A large continent with 54 countries and 922 million people. It has an enormous variety of cultures, industry sectors, business drivers, trading partners, historical connections, religions and political parties. It is blessed with considerable natural resources

19. Africa
BRIC countries have long recognised Africa as the next economic frontier – the region with the fastest growth after China and India
One billion people making an impact on consumer markets
Unexploited mineral wealth
60% of the worlds uncultivated agricultural land
The youngest age profile of any continent
Functioning and reforming democracies
The literacy rate is at an all-time high
South Africa’s accession to BRICS means that Africa is now also represented and will have its voice heard

20. Current Challenges Poverty Crisis Health Crisis African System
Financial
Stability
Political
Food
Security
Poverty Crisis
Economic
Stability
Health Crisis
African System
Energy crisis
Skills shortage
Climate change
Courtesy Dr. C. Nonkwelo

21. The African continent will have over 2 billion people in 40 years
Africa in 30 years
Nigeria will become the largest economy in continent in less than 20 years time.
The African continent will have over 2 billion people in 40 years
The African economy will be more integrated
The levels of democratization will be greatly expanded
The number of educated people will be much more than today

22. Private companies will find easier access into BRICS countries
Opportunities in South Africa
Investment and trade
Private companies will find easier access into BRICS countries
Partnership opportunities
South Africa already biggest emerging economy
SA companies active in at least half of all African countries
Increase competitive edge / ranking
Government increased commitment on infrastructure spend
Education receives the biggest budget
SA corporate – strong levels of cash flow
SA business now expanding to the USA and Europe

23. Sophisticated financial markets
What has South Africa to offer
Sophisticated financial markets
Soundly regulated and well regarded banking system
Clear intellectual property adherence rules
A stable and democratic government
Forefront of Africa’s regional integration efforts (AU)
Far easier to do business in South Africa than in BRIC – World Bank Study
The biggest investor on the African planet
“BRICS will actively promote trade and investment, which enhances industrialization and promotes job creation – From BRIC to BRICS is the better future for all” – Jacob Zuma
“South Africa is a major growth market in its own right and I do not hesitate to recommend it to other investors” – Richard Branson

24. The BRICs Impact on Global Markets: A Transforming Event
A sequence of pressures: crude, cars then capital
The growth of a BRICs middle class could be a key market dynamic
The timing of impact varies across the BRICs
The next decade is likely to be the peak period for resource pressure

25. Strong, stable political institutions Openness
To ensure growth as predicted
Sound, stable macroeconomic policies
Strong, stable political institutions
Openness
High levels of education
‘Miracle’ conditions are not needed.

26. A (further) shift in economic power away from west .
Implications of the rise of BRICS
A (further) shift in economic power away from west .
The rise and reshaping of regional networks.
Changing consumption and production patterns.
A flow of capital back to the BRICS as the world rebalances.
Appreciation – through exchange rates or through prices?
The need to reshape international institutions.

27. BRICS – Projections and initial targets
The BRICs Projections
The motivation: understanding shifts in global spending power
The goal: a 50-year roadmap of growth and incomes
The model: two parts to getting richer
The results: a dramatic change if things go right
The risks: conditions for converting potential to reality
BRICs Initial Targets
Explore : security issues
Reform : Support the reform of the IMF
Joint research : Economic and trade issues
Cooperation: in sports
Promote: scientific, technological and innovation cooperation

28. In conclusion
“Over the next 45 it is possible if BRICS countries pursue good economic policies that their economies collectively could become the biggest in the world”
“It that is true, it will have an enormous influence on every aspect of our societies and it will provide for those that have invested in the BRICS dream pretty spectacular returns”

29. Call for business ethics
BUT WHATS REQUIRED
Call for business ethics
Liberalization of markets and political institutions
Corporate social responsibility
Sustainable development
Partnership of women and men
A new paradigm of work
Consultation in decision making
Value-based leadership
Information technology explosion
Destabilization of our ideas of management
and leadership

30. “Education is the most powerful weapon which you can use to change the world.”
Nelson Mandela

31. THANK YOU