The Crucial Role of South Africa in the fast Emerging Multipolar World

The B.R.I.C.S. economic union, is capturing our attention, as South Africa recently held a B.R.I.C.S meeting with all foreign ministers represent each member states and a few applicants to the organisation. Moreover, South Africa will be playing host to the upcoming B.R.I.C.S. summit in Johannesburg in August 2023. Economic independence and sovereignty are playing a pivotal role in a changing geopolitical and economic climate of the multipolar world.

South Africa is playing an essential role in gathering the world leaders, taking a central stage of unifying an increasingly co-operative initiatives, policies and guidelines. Whilst, the nation is still overcoming some past and present obstacles.

Domestic Economy:

• Throughout most of the 20th century, South Africa implemented development policies based on the import substitution industrialisation model (I.S.I.), which relies heavily on import protection and subsidisation. There was increasing interest from the private sector in import-replacement activities, primarily in relation to inputs for resource-based industries such as mining. Prime examples include work-wear and chemicals. Following the implementation of global sanctions from the 1960s — 1990 placed on South Africa due to apartheid policies, the national government placed priority towards state support of heavy industries such as steel (Iscor), synthetic fuels (Sasol, Mossgas) and defence (Denel). 

• Due to South Africa having a small local market (the opposite of economics of scale), a small economy and a terrible distribution of income, resulted in the decline of import substitution industrialisation as a development policy during the 1970s. Especially, as I.S.I resulted in developing nations such as South Africa still relying on foreign direct investments, which dried up as a result of economic sanctions. South Africa managed to continue recording high levels of trade despite sanctions, trade was mainly concentrated in mineral exports. The revenue from mineral exports provided the necessary resources to develop the domestic local manufacturing industry.

   

• The development policies implemented between post-1994 and early 2000s, primarily focused on utilising free trade and supply-side measures achieved mixed results. On one hand, manufacturing industries have transitioned towards more capital and skills using technology. On the other hand, many of the resource based industries in the cases of agriculture and mining have being reducing employment opportunities. Whilst, the production profile represents one associated with a middle-income economy, these shifts have exacerbated structural unemployment, continuing to have negative impacts on the nation’s economic development. To overcome some of the socio-economic setbacks experienced in South Africa since the 2000s, the national government have continued to place priority towards investing and supporting sectors based around science and technology (e.g., I.C.T., space, biotechnology and renewable energy). Especially, as many developing nations view innovative solutions as a new source of competitiveness globally and which ensures long-term economic growth.
• Latest developments — June 06th 2023, despite record levels of load shedding (controlled blackouts) and aggressive rate hikes, South Africa’s first-quarter Gross Domestic Product (GDP) grew by 0.4%.The economy shrank by a revised 1.1% in the fourth quarter of 2022. Growth in the first quarter means South Africa avoided a technical recession, which is defined as two consecutive quarters of a shrinking economy. The South African Reserve Bank previously estimated that load shedding (controlled blackouts) will shave two percentage points off GDP growth this year. The bank’s aggressive rate hiking cycle — 475 basis points over 18 months — is also restricting the economy. Manufacturing continued to grow (1.5%), with food and beverage output increased the most in the first quarter.
• The finance, real estate and business services industry (+0.6%), personal services industry (+0.8%) and the transport, storage and communication industry (+1.1%) also saw growth. Although, agriculture decreased by 12.3%, weighed down by a decline in the production of field crops and poultry farming . The motor trade also recorded a decrease in economic activity. As highlighted by this recent trend, it is more imperative the national government is pursuing investment and development of new industries around innovation, which will not only help the nation have a qualified labour force, but a diversified economy, shifting reliance away from the primary, secondary, tertiary sectors of economic growth.

As highlighted in growth below (figure 1), since 1994, South Africa’s G.D.P. has experienced steady decline in both annual growth and per-capita.

                                         Figure 1 South Africa's GDP growth and per capita growth (World Bank, 2023)

New Innovative Trends in Science and Technology:

• Renewable energy: this sector in South Africa is currently experiencing fast growth in investments and supportive government policies (neo-statism). This sector presents an ideal opportunity to create new jobs in the nation, by entering into upstream production activities such as the manufacturing of solar and wind-energy components. Moreover, on November 29th 2022, during a press conference, Cyril Ramaphosa discussed about South Africa’s strategy to export green hydrogen and derivative products, such as green steel, sustainable aviation fuel, ammonia and fertilisers. Especially, as the nation is also seeking to position itself as a major manufacture of electrolysers, fuel cells and renewable-energy components. In addition, South Africa has several assets in pursuing its hydrogen ambitions: deep expertise in the Fischer-Tropsch process (which is used in the production of power fuels), major production capacity of critical minerals necessary for hydrogen, and infrastructure that could be used for the hydrogen. As highlighted in figure 2, South Africa has the world’s largest producer of PGMs (platinum group metals) and have the world’s largest reserves (figure 3).

  

                                                 Figure 2 - World Platinum producers (2021)

• Despite platinum being one of the key ingredients in the production of green hydrogen, this mineral currently contributes very little towards the nation’s G.D.P., because the majority of raw materials are exported and not processed in the nation. Thus, Hydrogen technologies could allow the government to reverse the course by creating a more integrated domestic value chain. Also, the Platinum Valley Initiative (PVI) is one of the four catalytic projects identified in the strategy document to kick-start the country’s hydrogen economy.

  

                                           Figure 3 - World reserves of Platinum (2021)

• South Africa’s abundant renewable resources offer a natural advantage. A recent report by the National Business Initiative says that South Africa could produce green hydrogen for $1.60 per kg by 2030, one of the lowest costs worldwide. This could help the country reach its goal of doubling its current share of global hydrogen production by 2050 — from 2 to 4 percent.
• Biotechnology: April 30th 2023 marked the official opening of the mRNA technology Hub facility at Afrigen, South Africa. Over 200 international participants working with the mRNA Technology Transfer Programme gathered in Cape Town for their first in-person meeting. Joined by World Health Organisation (W.H.O.) Director General, Dr. Tedros Adhanom Ghebreyesus and Dr. Joe Phaahla, Minister of Health and Minister of Trade and Industry, Mr. Ebrahim Patel of South Africa together with high-level officials from funding countries, this unique meeting reviewed the progress since WHO and Medicines Patent Pool (MPP) launched this initiative in June 2021. Minister Blade Nzimande of Higher Education and Science, stated: “Ours is the vision of the mRNA Technology Transfer Hub beyond just COVID-19. The capabilities we are building are looking to empower us to deal with other future pandemics whose vaccines could use the same mRNA technology platform. It is a vision that has set its eyes on diseases that are prevalent in our environments such as Malaria, Tuberculosis and HIV and AIDS.”

• Space industry: South Africa has a longest established presence in the space industry during and after the cold war. Over the years, South Africa’s space capabilities expanded with the introduction of commercial space companies, spin-out companies from the Universities, the founding of the South African National Space Agency (SANSA) in 2010, fostering research, development, and international collaboration. Notably, South Africa has made significant contributions in the area of astronomy, following the construction of the Southern African Large Telescope (SALT), the largest single optical telescope in the Southern Hemisphere. Furthermore, the country’s MeerKAT radio telescope, plays an integral part of the Square Kilometre Array (SKA) project, expecting to revolutionise radio astronomy. In comparison to other African nations, South Africa has launched the most number of satellites into orbit (figure 4).

  

                                                              Figure 4 - SpaceHub Africa (2023)

• In the case of developing domestic launch capabilities, on April 7th 2023, the Phoenix-1D sound rocket carried a payload of experiments and cameras on its flight (figure 5). It was part of a combined technology and skills development programme. The technology aspect was an integrated space propulsion programme, to develop both suborbital sounding rockets, under the designation Phoenix, and a liquid rocket motor for orbital flights, designated SAFFIRE (for South African First Integrated Rocket Engine). The University of KwaZulu-Natal is currently the only South African university a dedicated rocket propulsion programme. The human skills development aspect of the programme is focused on the development of advanced engineering skills graduates. Over the past 12 years, this programme has produced such alumni, who have secured employment in the country’s defence, space and science and technology sectors, establishing a flexible and qualified labour force.

• Foreign Relations:

• As South Africa is a member of the B.R.I.C.S. (Brazil, Russia, India, China, South Africa), the nation has played a significant role in advocating for expanding membership and charting an independent course in its foreign policy.

• Cape Town meeting: between June 1–2, the summit of foreign ministers of the B.R.I.C.S. countries and applicants such as Saudi Arabia, Iran, the United Arab Emirates (UAE), Cuba, the Democratic Republic of Congo (DRC), Comoros, Gabon, Kazakhstan, Egypt, Argentina, Guinea-Bissau and Indonesia. Among the topics discussed at the meeting were topics such as U.N. Security Council reform, protection of multilateralism, unilateral international sanctions against international law, regional and global security issues, sustainable development, global economy, fight against terrorism, climate, energy security and use of national currencies in trade. At present, the B.R.I.C.S. comprises 35% of the Earth’s territory, 40% of the world’s population, and 30% of the world’s gross domestic product (G.D.P.).

• Playing the role of peacemaker: Increasingly, South Africa is starting to play a key role to resolving recent conflict, from hosting peace talks to recently proposing a peace plan.

• On No November 2nd 2022, Ethiopia’s federal government and leaders of the country’s northern Tigray region agreed to end two years of devastating war. The welcome deal, brokered by the African Union (AU) in the South African capital Pretoria, was a triumph for Ethiopian Prime Minister Abiy Ahmed, as Tigray’s embattled leaders assented to disarm their forces and restore federal authority in the region. In exchange, the Ethiopian military, and Eritrean troops who had been fighting alongside federal forces, halted their advance toward Tigray’s capital, Mekelle, and Addis Ababa said it would end its de facto siege of the region. In follow-up talks, Tigray authorities secured an additional pledge that Eritrean forces would withdraw. Fighting between the two sides has stopped.

   

• On May 16 2023, Ramaphosa announced the African peace plan to establish a ceasefire between Russia and Ukraine. The South African peace plan, has being backed by the leaders of Senegal, Uganda, Egypt, the Republic of the Congo and Zambia. Moreover, South Africa has declared its neutral stance regarding the situation in Eastern Europe and has abstained from voting on U.N. resolutions on the war. The specific details of the peace plan have not been publicly released, but according to Ramaphosa, both the United States and Britain have expressed “cautious” support for the plan and the U.N. Secretary General has also been informed about the initiative.

• Critique:

• Based on the three topics explored here in relation to South Africa’s domestic economy, latest trends in science and technology and foreign policy, highlights essentially how South Africa is playing a key role in fast emerging multilateral world.

• The nation once pursued import-substitution industry as a development policy, is now actively pursuing neo-statism (state-led capitalism), to overcome the set-backs experienced from the development policies implemented during the post-1994 and early 2000s period. Moreover, the nation just managed to avoid a technical recession in 2023. However, the engines of economic growth are primarily in the primary, secondary and tertiary sectors, alongside the negative impact of load shedding (controlled blackouts).

• By the nation pursuing neo-statism policies towards science and technology related industries: renewable energy to overcome the setbacks of load shedding, establishing a medical hub to support the nation’s biotechnology industry and investing in domestic rocket launch capabilities, establishes South Africa as an ideal innovative hub in Africa. By placing priority on these sectors, helps not only diversify the nation’s economy, but also provides it with a highly qualified and flexible labour force, similar to other members of the B.R.I.C.S. Moreover, the nation should establish a national sovereign wealth fund, which China and Russia has done.

• As South Africa recently played host to the B.R.I.C.S. foreign ministers meeting and peace talks between Ethiopia and Tigray, the nation is now increasingly becoming a major global hub of interest in the multilateral world. Moreover, after China and Brazil, South Africa is the third member of the B.R.I.C.S. to have proposed a peace plan to resolve the conflict between Russia and Ukraine, whilst maintaining a neutral stance. Despite the political and economic threats of certain western nations to punish South Africa for taking this stance, the nation is still holding firm and highlighting the importance of B.R.I.C.S. and other developing nations. One can view this neutral stance as part of the emergence of a new global non-aligned movement. Going forwards, as the next B.R.I.C.S. upcoming summit in August will be hosted in South Africa, this marks the nation’s key role as a major hub in the new multilateral world.