Africa

Details

  • Industry: BRICS
  • Type: Press release
  • Date: 4/3/2013

BRICS

During the Fifth Annual BRICS Summit held in Durban, South Africa, in March 2012 KPMG compiled a series of thought leadership and investment guides for investors interested in BRICS and its interaction with Africa.

The BRICS Corridor: Finance 

Lullu Krugel, senior economist, KPMG in South Africa, shares her view on the role of finance and Small, Medium and Micro-sized Enterprises (SMMEs) in Africa’s development following the fifth annual BRICS Summit.

SMMEs are regarded globally as one of the major catalysts for economic growth and development. This is even more apparent in the aftermath of the global economic downturn.

 

SMMEs represent almost two thirds of total global employment opportunities. Research by the OECD also indicates that, during the high growth periods of developed economies, nearly all job creation came from organisations that were less than five years old. Smaller enterprises also lost fewer jobs during the recession. It is therefore clearly important that SMME development, opportunity creation and support should be a key component of the economic development strategies of the BRICS nations.

 

However, due to the structure of the economy, the reach of governments and their policies and the impact of individual SMME’s, it is quite often difficult to reach SMME’s. Unless there is a specific focus on SMME opportunities, or a dedicated unit to deal with these, in the BRICS Development Bank and BRICS Trade and Risk Development Pool, it would be difficult for these institutions to provide support and finance to SMMEs. The latter, in particular, is often one of the largest impediments for SMME growth.

 

A more direct, and potentially more effective, way of addressing SMME challenges and opportunities is through the BRICS Business Council. Direct business-to-business access could serve to increase the chances of SMMEs growing in their markets.

 

On a macro-level, however, the BRICS Development Bank and the BRICS Trade and Risk Development Pool, could improve market conditions and reduce trade barriers, in turn making the general trade environment easier for BRICS nations, providing access to foreign reserves and reducing the “third party” currency issues that could develop with cross border trade for BRICS nations. A general improvement in the trade environment could benefit SMMEs as well.

 

Contact

Contact
Lullu Krugel
Senior Economist
Tel: +27 (0)11 647 8516
lullu.krugel@kpmg.co.za