When it’s a BRICS. BRICs, small s, is the plural way of referring to the emerging markets of Brazil, Russia, India and China. It’s debatable whether all of those countries can still be referred to as emerging markets after the decades of growth that they have enjoyed — or endured, where it occasionally didn’t go so well — since Jim O’Neill, then of Goldman Sachs, coined the term in 2001. Is China an emerging market or the world’s second-largest economy or both? Though some would point to certain of the current risk, legal and political characteristics of those four countries as firmly meaning that the term does still apply.
BRICS, big S, is BRIC plus the S of South Africa, one of the top economies in Africa — certainly by GDP and definitely by GDP per capita — but another country that some investors across all asset classes might have problems with on risk, legal and political grounds, especially in the wake of the report published on Nov. 2 into possible endemic corruption at the upper levels of the South African government.
I have just returned from Cape Town, South Africa’s parliamentary and legislative capital, and can report that the view from the top of Table Mountain defies description — cable car and high winds permitting — particularly if you remember that the sun moves to the north during the day and not to the south, but also that the path of economic progress does not run smooth.
Table Mountain
It’s fine if you are in the heart of Cape Town CBD or head for the vineyards of the gentrified wine-growing areas around Stellenbosch and Franschhoek, not so fine if you live in the townships or locations of Khayelitsha or Mitchells Plain (apostrophe or no apostrophe on Mitchells, yer pays yer money, etc.), where poverty and crime is rife and where the struggles of the indigenous population exemplify the efforts needed to escape the natural, stone-strewn path of life in an emerging economy.
Cape Town CBD
South Africa — unsurprisingly, given its apartheid past — started with a policy of positive, black-first discrimination but this has not served its population well. It’s a black and white thing only in as far as the white elite has been augmented by a black elite and a burgeoning, aspiring, industrious black middle class; the poor, uneducated, downtrodden masses are still black and white and shades in between. Corruption, nepotism and historic intertribal feuds (the country has 11 official languages) are only some of the ongoing issues that have been holding the country back, and that’s before you get into the latent hostility between the Afrikaner and British white populations — and there are reasons for that.
A Cape Peninsula township. Photos: Richard Fleming
I last visited South Africa in 1982, at the height of apartheid. It was clear then that change was inevitable and it was good, and just as well, that the transition after 1989/1993 was peaceful (and that the country’s seven nuclear weapons were dismantled). The example of Zimbabwe shows how it could have gone.
Despite South Africa optimistically being placed in the BRICS basket — the implication being this will help turn it from an ugly duckling into a beautiful swan — the country hasn’t gone as far forward as you might expect. It is still a country of extremes and superlatives. Apartheid is no more — the days of white/nonwhite benches on railway station platforms are thankfully over — and the people may be free, but to what avail if daily life is still difficult, if the mass of population is not much better off (or does not think it is better off), if the gap between rich and poor is greater than ever?
There is an undercurrent of dissatisfaction, social conflict and potential future disruption. Unemployment among the registered workforce is among the highest in the world, at 27 percent. Among the black population, unemployment is reported to be five times higher than for the white population, at 40 percent. That’s hard to escape from. Jobs in the moribund private-sector economy are few and far between, whether you’re uneducated or educated to degree level. The latest quarterly labor force numbers were due to be published on Oct. 31 but were postponed twice in the weeks since due to difficulties with data collection.
This is not what Nelson Mandela had in mind. And it is not what being part of a favored-country, forward-looking emerging-market acronym like BRICS is meant to be about.
And what is the plural of BRICS?
The views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.
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Richard Fleming is editor of Institutional Real Estate Europe.
