TITLE OF DOCUMENT

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BRICS Potential, Opportunities and Challenges
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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

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The Emergence of BRICS

• In 2001 Goldman Sachs executive Jim O Neill in
  his article The world needs better economic
• BRICs 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 2011. 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.

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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 worlds foreign
• exchange reserves
• 40 of the worlds
• population
• 25 of the worlds land area.

Source BRIC model projections
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GDP and GDP per capita projections - 2050
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Economic gravity shifts to Asia
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China set to take pole position
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Share of the world
Source Goldman Sachs South Africa not included
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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
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Future Predictions
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BRICS exchange rates
BRICS Exchange rates could appreciate by close to
300 by 2050
Spectacular Potential
Source BRICS Model Projections
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Brazil
The Jaguars

• Over the next 50 years, Brazils GDP growth rate
  averages 3.6.
• The size of Brazils 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
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Russia
The Bears

• By 2050, Russias GDP per capita is by far the
  highest of the BRICs.
• Demographic dynamics drive GDP per capita path.
• Russias economy overtakes Italy in 2018 France
  in 2024 UK in 2027 and Germany in
• 2028.
• Critical issues Life after Putin The
  Transition from Oil.

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India
The Tigers

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

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China
The Dragons

• Chinas 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 worlds largest
  economy by 2041.
• High investment rates, tapers off though
  projection period.
• Chinas per capita income could be roughly what
  the developed economies are now
• (about US30,000 per capita).
• Critical issues Financial System Reform
  Political Transition, Environmental issues

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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 Africas financial system remains intact,
  no bailout required

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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
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Africa
The Emerging GIANT

• The African continent has a total annual GDP of
  US1.6 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 US70 billion to the World economy
• The African continent has over 1 billion people
• The continent is more democratic than ever before

Africas 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
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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 Africas accession to BRICS means that
  Africa is now also represented and will have its
  voice heard

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Current Challenges
African System
Courtesy Dr. C. Nonkwelo
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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

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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

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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 Africas 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
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BRICS Impact

• 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

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To ensure growth as predicted

• Sound, stable macroeconomic policies
• Strong, stable political institutions
• Openness
• High levels of education
• Miracle conditions are not needed.

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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.

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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

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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
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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

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

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THANK YOU