South Africa & BRICS: The Good, The Bad and The Ugly

South Africa’s place within BRICS, the bloc alongside Brazil, Russia, India and China, has often been debated since its accession in 2010. At first glance, the country is a minnow among giants, contributing less than 1% of global GDP compared to China’s 18%.

Yet, like a smaller piece on the chessboard, its position matters less for scale than for strategy: geography, resources and diplomacy.

The Good

Membership offers South Africa a global platform beyond its economic weight. Being part of BRICS secures a seat at the table where new development banks, trade frameworks and political alliances are shaped.

For a resource-rich country, closer ties with commodity-hungry China and India provide potential long-term demand stability. The New Development Bank, headquartered in Shanghai, has also extended infrastructure funding - capital that can complement, if not replace, traditional channels like the IMF and World Bank.

The Bad

Alignment with BRICS carries reputational costs. Russia’s invasion of Ukraine and China’s more assertive foreign policy have turned the bloc into a lightning rod for Western scrutiny.

South Africa’s perceived neutrality (often read as tacit support) risks straining relations with its largest traditional trade and investment partners: the US and the EU. With Western capital still far outweighing BRICS inflows, this introduces potential friction for foreign direct investment.

The Ugly

The greatest challenge lies in perception. Foreign investors prize policy clarity, stable governance and credible institutions. South Africa’s association with BRICS, while symbolically elevating, risks amplifying doubts about its alignment with Western norms of transparency and rule of law.

In practical terms, it could mean slower progress on investment treaties, tighter scrutiny of South African corporates abroad and higher risk premia attached to capital raising.

The Investment Impact

For portfolios, the implications are nuanced. On one hand, BRICS offers South Africa optional upside through diversified funding channels and closer trade integration with emerging markets.

On the other, reputational overhang with developed markets could dampen foreign direct investment at a time when domestic growth is already constrained by infrastructure bottlenecks and fiscal strain.

In the long run, South Africa’s inclusion in BRICS is unlikely to be decisive for investors on its own. What matters more is whether the country can use this platform to attract infrastructure finance, expand trade routes and diversify capital sources, while simultaneously reassuring traditional partners of its reliability.

For long-term investors, this duality suggests caution but not disengagement. South African assets retain value where pricing reflects resilience, particularly in companies with offshore earnings and robust balance sheets.

Disclosure: Views are those of Frants Preis, CFA and are not investment advice.