The 15th annual BRICS Summit, an informal alliance of countries challenging the dominance of Westernised nations, convened in Johannesburg in August 2023. During the summit, it was announced that Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates would join the five original members: Brazil, Russia, India, China and South Africa. With the addition of these six countries, BRICS now represents 42% of the world's population and 36% of global GDP.

Nobesuthu Ndlovu, Director: SME at Old Mutual, highlights that the BRICS platform offers several advantages for its member countries, including access to substantial and diverse markets, shared resources, strengthened financial and trade ties, and the consolidation of their geopolitical influence.

How will South Africa benefit?

A call to give preferential access to businesses from BRICS countries will allow them to explore opportunities in South Africa, which will usher in opportunities for local small businesses to participate, according to Thabelo Raphala, Managing Director at My Dough and an SME coach.

However, even though SMEs can take advantage of improved market access and any funding that may become available, Ndlovu says local SMEs may have to work hard to advance their interests because an expanding BRICS bloc may diminish South Africa’s influence.

“The two African states joining – Egypt and Ethiopia – are both more populated than South Africa, and experience higher rates of economic growth, albeit in much smaller economies,” she points out.

The trade picture

BRICS economies accounted for about 21% of South Africa’s total trade with the world in 2022, with trade increasing by an average of 10% from 2017 to 2021. However, previously SMEs struggled to take advantage of this due to the challenge of high tariffs, non-tariff barriers, poor logistics infrastructure, insurance costs and currency volatility.

“SMEs may be able to benefit from trade agreements with BRICS members, which now promises reduced trade barriers, lower tariffs and streamlined customs procedures,” says Ndlovu. “For South African small businesses, this translates into easier access to international markets, reducing the cost of doing business globally.”

She says BRICS nations will explore increased trade opportunities ushered in by the African Continental Free Trade Area (AfCFTA). This could be especially advantageous to local SMEs as many countries still see South Africa as the gateway to the rest of Africa.

“BRICS countries have expertise and resources in infrastructure development, and there are opportunities to collaborate on projects such as transportation, energy and telecommunications,” Ndlovu points out. “In addition, cooperation in the agricultural sector can help address food security challenges and promote trade in agricultural products.”

How can SMEs leverage opportunities?

Ndlovu says BRICS nations often establish mechanisms to support entrepreneurship. “Access to such funding can be a game-changer for startups in South Africa, providing the financial boost they need to scale their operations and expand their reach,” she says.

Raphala proposes the following seven strategies that SMEs can implement to leverage BRICS trade agreements:

1. Understand the agreements. This includes knowing the specific products or services covered, tariff reductions and rules of origin.

2. Identify export opportunities. Conduct market research to identify potential export opportunities within BRICS member countries. Consider factors like market demand, competition and regulatory requirements.

3. Develop export-ready products or services. Ensure that products or services meet the quality, safety and regulatory standards required for export to BRICS markets.

4. Build strong relationships with key stakeholders, including trade promotion agencies, chambers of commerce, and industry associations, to gain insights and support for international trade.

5. Consider participating in export training programs and workshops offered by trade organisations or government agencies to enhance export capabilities.

6. Participate in trade fairs, exhibitions and business matchmaking events in BRICS countries to showcase products or services and establish connections with potential partners and customers.

7. Understand local business cultures. Be culturally aware and sensitive to the business practices and customs of the BRICS countries the business aims to trade with.

Harnessing the power of BRICS

The BRICS alliance provides access to new markets, technological advancements, and funding opportunities.

“In short, it provides South Africa with a platform to advocate for the interests and concerns of its small businesses on a global stage,” says Ndlovu.

“Collective strength can lead to more favourable trade policies, ensuring the unique needs of South African entrepreneurs are taken into account. We need to embrace the BRICS alliance as it can help to unlock the potential of our SMEs, thus ensuring their growth and sustainability.”