South Africa takes huge economic leap

2019-02-10 15:00

South Africa takes a giant step on the economic front next week, going to the African Union (AU) summit tomorrow in Addis Ababa with a mandate to formally approve the establishment of the African Continental Free Trade Area.

The agreement, which is a flagship project of the AU, seeks to facilitate intra-Africa investment, create the largest integrated market on the continent and boost prospects to stimulate industrialisation, employment, income generation and poverty reduction.

President Cyril Ramaphosa said in the state of the nation address that “the agreement will see the creation of a market of more than a billion people with a combined GDP [gross domestic product] of about $3.3 trillion”.

The agreement “offers great opportunities to place South Africa on a path of investment-led trade and to work with other African countries to develop their own industrial capacity”, said Ramaphosa.

In December Parliament ratified the agreement and the Ethiopia summit provided the first opportunity for South Africa to deposit its instrument of ratification, joining countries such as Kenya, Ghana, Rwanda, Chad, Niger, Sierra Leone, Uganda and Guinea.

A total of 22 African states needed to deposit their instruments of ratification before the agreement came into force, but Trade and Industry Minister Rob Davies said on Friday he was optimistic that it could be achieved before the end of this year.

“We have been engaging with them [the World Bank] to try to find out what, concretely, we need to do to improve our ranking to the top 50. That is our goal now,”

“There is quite a long way towards implementation coming into force.

“As South Africa we will deposit our instrument of ratification. The expectation is that we will hit 22 [states] sometime in the course of the year. The roll call at the commission suggests the number will be reached in the course of this year,” said Davies.

He said that Ramaphosa’s investment drive was already yielding results on the ground, citing as examples a zinc mining project in the Northern Cape and a new factory at the Dube Trade Port in KwaZulu-Natal.

He said companies such as Proctor & Gamble, Hisense and Defy had started to act on their investment commitment.

“It is all on our radar screen, so what was announced at the investment conference last year is happening. These things are being followed through and there will be a number of things happening in the near future,” said Davies, adding that the government was continually updating its national investment book, which it used to show opportunities to investors.

The next step was for provinces to do the same.

Ramaphosa said the aim was to spread all the investments that were being generated throughout the country and provinces needed to be on board.

“I have asked provincial governments to identify investable projects and ensure that we build investment books for each of our nine provinces to present to potential investors,” he said.

Davies said: “The way you attract investment is to show people where the opportunities are, what government programmes are there to support the investment and what incentives we may deploy.”

Second, he said, government had to make the investment environment easier and to be available for people when they required various decisions by different parts of government in terms of regulatory permits.

He said Invest SA was helping investors navigate their way through by going to government agencies to try to enhance the understanding of the importance of the investments and to shorten the time frames. He said more Invest SA offices would be rolled out in provinces in the course of the year.

Davies said the government wanted to enhance the environment for doing business in the country through “a programme by Invest SA to get the World Bank to raise our ranking”.

“We are now at 82 of 140-odd countries rated by the World Bank in terms of the ease of doing business.

“We have been engaging with them [the World Bank] to try to find out what, concretely, we need to do to improve our ranking to the top 50. That is our goal now,” he said.

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May 19 2019