Three memoranda of understanding (MOU) were signed by the Industrial Development Corporation (IDC) and partners from China, Russia and Brazil during the fifth BRICS Summit, held in Durban on 26 and 27 March.
Minister of Economic Development Ebrahim Patel said, “South Africa is ready to partner with investors from other BRICS countries to expand our manufacturing base and support the development of small businesses.
“We are expanding our own support to small businesses and the agreements with state financial institutions from Brazil and Russia will allow us to learn from each other. Smart financing is as critical as more financing,” he said.
“I am pleased that the agreement with Brazil also provides for potential co-funding in key industrial areas. The BRICS membership is now showing its potential benefits to the local economy,” Patel said.
Support for SME development
The following three parties signed an MOU agreeing to co-operate on SME development:
- The State Corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank), a Russian state corporation
- OJSC Russian Bank for Small and Medium Enterprises Support, a subsidiary of Vnesheconombank (SME Bank)
- South Africa’s Small Enterprise Finance Agency (Sefa), a subsidiary of the IDC.
Specifically, they have agreed to exchange information and work together in the provision of training, delegation visits and business forums. The MOU will serve as the basis for further negotiation and agreement.
All the parties have promised to co-operate in the following areas:
Capacity-building: exchange of technical expertise through placement of personnel; and, creation and realisation of shared capacity-building initiatives. Study and training programmes for each other’s employees will be included.
Strategic initiatives: involvement in any strategic initiatives that have potential to benefit the respective countries, the parties and/or SMEs. The groups will work with each other’s branches and representative offices, and will also introduce each other to clients who have an interest in investing in the respective countries.
Industry research and development: they will also partner in commissioning research to benefit the SME sector, as well as set up a long-term, comprehensive relationship in servicing trade, economic and technical co-operation between Russia and South Africa.
In addition, under the MOU, the parties will seek to extend financial operations, especially with a view to support export financing programmes.
They will also strengthen co-operation on supporting SMEs, and expand structured and trade finance business, including export-import financing and business transactions.
Co-operation with Brazilian financier
The IDC also signed an MOU with Brazil’s Banco Nacional de Desenvolvimento Economico e Socia l- BNDES (BNDES), a Brazilian development finance institution.
They agreed to establish and develop comprehensive, long-term co-operation, focusing on specific sectors, namely:
- Automotive and components, including alternative-fuelled vehicles
- Aeronautics and components
- Energy generation, particularly the use of renewable/cleaner energy sources and co-generation
- Food processing and other agro industries
- Mineral resource beneficiation.
The two parties aim to strengthen and enhance trade and economic relations between Brazil and South Africa, and have identified areas for potential synergy and possibility for co-operation, such as:
- Small and medium enterprises (SMEs)
- Access to finance to support the export of capital goods and services