Business Maverick

ECONOMIC PARTNERSHIPS ANALYSIS

SA-Russia trade is minuscule even among BRICS members

SA-Russia trade is minuscule even among BRICS members
Russian President Vladimir Putin (left) and South African President Cyril Ramaphosa attend a signing ceremony after their meeting on the sidelines of the BRICS (Brazil, Russia, India, China and South Africa) summit in Johannesburg, South Africa, 26 July 2018. (Photo: EPA-EFE / Alexei Nikolsky / Sputnik / Kremlin Pool)

Data show that Russia is an insignificant trade partner of South Africa. In terms of economic partnerships, it is a clapped-out Lada vehicle, a lemon with not much juice to be squeezed from it.

As the BRICS 22-24 August summit looms in Johannesburg — in the shadow of Pretoria’s difficult diplomatic dance over Moscow — it is important to note just how unimportant Russia is to South Africa’s economy.

South Africa exports mostly citrus to Russia, giving it a shot of vitamin C. Russia exports mostly fertiliser to South Africa — and briquettes for our braais.

As a percentage of South Africa’s trading relationship with other BRICS members, trade with Russia barely registers. At a BRICS Business Breakfast last month, some useful data underscored the point that Russia is basically a brick compared with the Great Wall of Chinese trade flows to South Africa.

“SA’s trade with Russia is relatively low, representing only 1.7% of the country’s total trade (exports + imports) with the BRIC economies in 2022,” the presentation said.

“Relatively low” is an understatement. The other BRICS members — China, Brazil and India — account for 98.3% of South Africa’s trade within the grouping. China has the tiger’s share at 67.6%.

Whatever was loaded on the Lady R Russian cargo ship might have made a material difference to South Africa’s 2022 trade data with Russia, even if it was only lemons and koeksisters.

On a global scale, Russia was the destination for 0.2% of South Africa’s exports in 2022.

Citrus being the main export to Russia is logical as it is a crop that needs a hot, frost-free climate. Russians drink vodka without orange juice for a reason.

Citrus made up 47.7% of South Africa’s exports to Russia last year; apples and pears were second at 22%.

South Africa’s exports to Russia have been declining in recent years. Russia’s economy is currently stuck in a deep recession — mostly because of Western sanctions and the fact that it is a kleptocracy — so fewer Russians are going to be able to splash out on naartjies this year.

It’s simply not a growing market for South African goods, even for the stuff that Russia can’t grow itself.

On the flip side, South Africa’s imports from Russia were almost double the value of exports going the other way, at $540-million. But that’s still not much. South Africa’s imports from China last year amounted to $22.4-billion.

South Africa’s top imports from Russia were various fertilisers, copper wire and coal, including for briquettes. All could be easily substituted. Copper wire is commonly stolen in South Africa, so, ironically, a key import from a gangster state is a product that fuels gangsterism here.

South Africa’s main imports from China, by contrast, are things like cellphones, “data processing machines” and vehicles (all of which get stolen a lot), as well as electric accumulators and transformers. Useful things.

South Africa’s top exports to China are iron ore, manganese, ferroalloys and chrome — stuff often used to manufacture the stuff that China exports here. But at least the trade volumes are material and the relationship makes sense.

About the best that can be said for South Africa’s trade relationship with Russia is that some of the fertiliser it sends here might be used to grow some of the citrus that we send there. As far as economic partnerships are concerned, this is like a second-hand 1980s Lada vehicle — it’s effectively a lemon and there is not much juice to be squeezed from it.

The broad West

Beyond BRICS, the US accounts for 8.8% of South African exports, and about 600 US companies have investments here. The EU took 21.3% of South Africa’s exports last year.

This means the broad “West” accounts for more than 30% of South Africa’s exports.

Small wonder some people in the government are scrambling to retain South Africa’s status as a beneficiary of the US African Growth and Opportunity Act (Agoa) as Pretoria’s “nonaligned” stance in the Russian-Ukrainian conflict comes under scrutiny. Agoa provides preferential access to US markets for exports of various products from qualifying African countries.

But they are rowing against tidal forces in the ANC that hold nostalgic — and in many ways ahistorical — memories of Moscow’s opportunistic backing of the liberation struggle during the Cold War.

The South African Reserve Bank — an outfit not given to hyperbole — warned in May that if secondary sanctions were imposed on Pretoria because its neutral stance was viewed as “unconvincing … the South African financial system will not be able to function if it is not able to make international payments in USD”.

That warning came with the rand close to historic lows near 20/dlr, in part because of concerns about South Africa’s relationship with Russia.

This ham-fisted game of diplomatic drama, which included the joint naval exercises with China and Russia in South African waters in February, has cost the economy dearly. The rand’s decline has kept inflation on the boil and interest rates on the rise — thanks to jitters over links to a country that South Africa hawks fruit to in exchange for fertiliser.

The rand rallied nicely after Russian President Vladimir Putin said he would skip the upcoming BRICS summit. The currency has since given up much of that ground.

It’s hard to think of similar cases of an economy so unimportant having such an impact on another.

A small brick can make a big hole in a window, but hopefully this fiasco has also shattered some illusions in the ANC. DM

Gallery

Comments - Please in order to comment.

  • Easy Does It says:

    So Russia sends us crap and we send them lemons? Is that a code to indicate if we are ready or not for lady R?

  • Pet Bug says:

    Best one-sentence summary at the end I’ve read in yonks!

  • D'Esprit Dan says:

    That the ANC absolutely hates ordinary South Africans is now beyond debate: the puerile obsession with swaggering around the big ‘anti-western’ powers is killing our economy and the jobs that go with it. The ANC has reduced South Africa to a laughing stock amongst genuinely caring countries and a handy flag waver for the worst human rights abusers regionally and globally. Fikile Mbalula enthusiastically supporting ZANU-PF in the upcoming Zimbabwean ‘elections’ is just another example of this. As Zimbabweans flee the economic and political terror unleashed on them daily by Mnangagwa and the rest of the ZANU-PF elite, Mbalulua cheers them on from the sidelines, because, struggle buddies! We’ll have another bout of xenophobic slaughter in South Africa soon, which this disgusting mob will fob off as ‘criminality’, all the while supporting the filth who drove those desperate foreigners to our land. Please South Africans, for the sake of our country – not some abstract ‘future’, but the here and now, let’s get rid of this evil elite and the rest of the populist plunderers in the next elections. It’s our only hope.

  • Rob Blake says:

    Pray tell which brand of braai briquette do we import from Russia? I will boycott that one for sure.

  • Yvonne Riester says:

    I just don’t understand why the ANC supports all those evil dictatorships like Russia, China and Zimbabwe to which not a single African refugee wants to flee. Why do migrants from Africa, South/Central America and Asia want to move to Europe/USA if these Western Democracies are so terrible ?

  • Philip Machanick says:

    If there was a strong principled reason to choose an alliance over economics, there may be a case – as when the antiapartheid movement argued for sanctions despite the economic harm – aligning with Russia could be justified. But it would have to be a strong argument, given our dire economic situation.

    But what is the principled case?

    Russia violated the terms of the Budapest Memorandum (Russia, US and UK guaranteed Ukraine’s territorial integrity in exchange for giving up inherited Soviet nukes) as well as the UN Charter by invading Ukraine. The pretexts given are all bollocks. Unrest in border regions was stoked by Russia and there are no more Nazis in Ukraine than in many other countries. Including Russia. And Putin, following Hitler’s playbook and with lots of fans among white supremacists because of his reactionary, authoritarian politics, is hardly the one to be the standard-bearer against Nazism.

    Reality check: why would Ukraine target Russians only in the regions closest to Russia, where Russia can fight back? Russian propaganda is as clumsy as it is illogical: what you expect from a closed police state with absolute media control. It doesn’t work for anyone who has the capacity to question.

    As a society that fought hard for the right to disrespect authority, why would South Africa be cosy with an authoritarian state that’s favoured by white supremacists?

  • Alan Salmon says:

    And yet our wonderful govt love whisky, swiss watches and German cars – they really are schizophrenic.

  • Kim Isaacs says:

    Its not whats best for South Africa or whats moral. Does Russia not fund the ANC?

  • Trenton Carr says:

    You have forgotten the ANC’s favorite Russian export, plump diplomatic bags filled with shiny.

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