A $100 billion BRICS Development Bank was announced in March 2013 at a BRICS summit in South Africa. The development bank, however, is still developing, and Brazil, Russia, India, China and South Africa are having a rough year.
Back in March, TIME’s Rana Foohar wrote: “The fact that the American economy is growing faster than not only Russia’s but also Brazil’s and those of the emerging market nations is truly amazing. A decade ago,t he BRIC countries were supposed to be the world’s economic salvation. Since then, they’ve become complacent, and their growth has been cut in half. Some, like China are brewing up epic debt crises. Others, like Russia and Turkey, are ruled by autocratic strongmen trying to grapple with tumbling markets and foreign-capital flight on a massive scale.”
South Africa’s problems are particularly severe; the economy has slowed to a crawl, partly as a result of crippling strikes. Uncertainty and unhappiness regarding the recent elections have not helped even though the African National Congress managed to win more than 60 percent of the vote. The Economist has reported: “Unemployment has risen to 25% of the workforce, or 36% including those who have given up looking for work. A growing sense of disquiet about South Africa’s present—and anxiety about its future under a fractious ruling party—makes it hard for many South Africans to accept that anything has changed for the better since 1994.”
The Economist observed: “Three of the biggest problems are South Africa’s rigid labour laws, its unskilled workforce and a business climate that is increasingly unfriendly to much-needed foreign investment. Bargaining councils made of big established businesses and trade unions meet every so often to agree on wage levels and conditions of work. The minister of labour is then obliged to extend such agreements to all businesses in the industry. Big firms can live with the deals they cut with unions and find ways to comply with racial quotas set by affirmative-action laws. But small businesses struggle. As a result South Africa has a dismal rate of small-business creation in comparison with the BRIC countries—Brazil, Russia, India and China.”
South Africa desperately needs to release its entrepreneurial potential. Bloomberg Businessweek reported: “South African President Jacob Zuma pledged to intensify efforts to reduce poverty and unemployment and boost economic growth after his party won elections by the lowest margin since it took power 20 years ago.
“We will use our majority to implement policies and programs that further improve the quality of life for all, especially the poor,” Zuma, 72, said at the official release of the results in Pretoria yesterday. “There is a lot that we have to do and we are determined to do more.”
Zuma’s credibility, however, has steadily been eroded by corruption scandals. Never a bold economic thinker, Zuma has always been known more for his populist appeal. South Africa deserves better. As the British Guardian lamented: “Two decades of modest economic growth have left the white minority better off than ever but half of young black people without a job. South Africa is one of the most unequal societies on Earth and reaping a whirlwind of frustration and unrest.”