Nhlanhla Nene speaks on why emerging economies are most at risk from trade wars

Finance Minister Nhlanhla Nene recently spoke at the 10th Brics summit, emphasizing the importance of emerging economies uniting against protectionism amidst the ongoing trade wars instigated by the United States. Nene highlighted the significance of countries coming together to protect multilateralism, given the historical context of various global institutions being established to tackle financial crises. The Minister noted that most nations, not just BRICS countries, are rallying to defend the principles of multilateral cooperation which have underpinned these institutions. Speaking in response to the escalating trade tensions, Nene expressed concerns about the adverse impact on small open economies like South Africa. He pointed out that while larger economies might weather the storm better, smaller nations face heightened vulnerability in such situations. Nene also underscored the detrimental effects of tariffs imposed on South African exports, such as steel and aluminum, which have disrupted trade flows and economic stability. Despite acknowledging the challenges posed by retaliatory measures in trade disputes, Nene emphasized the importance of collaborating with allies to mitigate the repercussions. The Finance Minister stressed the need for unity and cooperation among emerging economies to navigate the uncertainties caused by trade wars and safeguard their interests. Turning to the issue of financial support for state-owned enterprises (SOEs), Nene discussed the $300 million loan with guarantees extended to Eskom, South Africa's state-owned utility. He acknowledged the infusion of private equity as a means to inject discipline and much-needed liquidity into struggling SOEs. Nene highlighted the significance of external funding in addressing the financial constraints faced by state entities while emphasizing the importance of proper oversight and governance to ensure transparency and accountability in the utilization of funds. Furthermore, Nene discussed the broader financial assistance being channeled into South Africa, including the $680 million from the New Development Bank, with plans for additional funding in the pipeline. He mentioned specific projects, such as the expansion of terminals at Transnet and investments in renewable energy and municipal infrastructure through the Development Bank of South Africa. Nene also hinted at upcoming water projects, including the SUTO water highland phase two, which are poised to drive significant investments and economic growth for the country. Overall, the Finance Minister's remarks underscored the imperative for emerging economies to forge alliances, access external funding, and pursue strategic investments to navigate the challenges arising from trade wars and strengthen their economic resilience.