South Africa trade minister seeks a more integrated Africa
Rob Davies, South Africa's minister of trade and industry, tells Courtney Fingar how the country's renowned reputation in the motor industry and renewable energy is being used to spearhead its FDI policy, and why he has high hopes for greater African integration when it comes to trade.
Q: How do you view the investment competitiveness of South Africa in terms of both weaknesses and strengths?
A: Improving investment performance is one of the elements in what we call our 'Nine Point Plan' – which is to confront the challenges that we find ourselves in and see where we deliver a clear value proposition on a sectoral basis.
We’ve seen that foreign investors have responded quite positively so the two areas I would cite would be the motor industry, where we’ve seen a very significant number of original equipment manufacturers investing in the South African motor industry, and newcomers coming in as well from places such as China. And the other area I would cite is the renewable energy, independent power-producers programme. We have the largest renewable energy programme on the African continent, but also one where there’s a recognition that it’s one of the better designed programmes on a world scale. The broader lessons from this are that the way to boost investment is to develop clear value propositions and market them.
Second, we have our investment promotion agency, which is now called 'Invest South Africa'. It has been upgraded in its scope of work and is overseen by a committee, which is chaired by the president [of South Africa, Jacob Zuma]. Some of the weakness we’ve had is that [there have been] a number of regulatory decisions that have had to be taken in order for any investment to actually happen. Now we’ve got sharper tools to be able to smooth the way.
Q: How important is trade integration for your FDI positioning?
A: That’s our priority as far as trade is concerned – to promote development integration on the African continent. We’re part of the tripartite process [Southern African Development Community, or SADC, Comesa and the East African Community Free Trade Area] but we’re also supportive of a continental free-trade area. It’s taking longer than is desirable at this point, but we’re doing our best to try to move some of the process further forward. One of the ones that is moving, which is quite relevant to us, is that SACU – the South African Customs Union – and the East African Community are now engaged in serious line-by-line trade negotiations. We are starting the process of trading services, and in SADC we’ve got somewhere.
The infrastructure building programme on the African continent [the Programme of Infrastructure Development Africa – PIDA] is an integral part of [the plans], and it’s making some progress. The north-south corridor programme is making some progress too. All of these are steps we need to take to ensure a greater volume of intra-regional trade, but also intra-regional trade in value-added products.
Q: There are many links between South Africa and the UK. What kind of impact do you expect from Brexit in South Africa, if any?
A: I’ll put it in context at this moment in time. The UK is our eighth largest trading partner, and the second largest in the EU. It’s responsible for about 4% of our total trade. We don’t see a huge amount of disruption taking place in the trade area. The impact of Brexit is more likely to be felt in the form of whatever impact it has on the overall state of the world economy. The uncertainty it has created and the consequent possible further depression of the world economy – that would be the biggest shockwave that could come our way as a result of Brexit.
We have engaged in very preliminary discussions… On the trade front, we don’t anticipate disruption; we anticipate that we’ll be able to continue to maintain the trade and investment ties we have with the UK.
The fDi Report 2016
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