Date: 18/01/2003
Source: Deputy Ministry of Trade and Industry
Title: Hendricks: Jeddah Economic Forum
SPEECH BY THE DEPUTY MINISTER OF TRADE AND INDUSTRY, REPUBLIC OF SOUTH AFRICA, MRS LINDIWE HENDRICKS, AT THE JEDDAH ECONOMIC FORUM, Saudi Arabia, 18 January 2003
THE ROLE OF E-COMMERCE IN DEVELOPING BUSINESS - IN THE CONTEXT OF SOUTH AFRICA AND AFRICA
Members of the Saudi Royal family, political dignitaries, honoured guests, first lady of South Africa, Mrs Zanele Mbeki, programme director, ladies, Asalama alaykum.
The President of South Africa, Mr Thabo Mbeki, sends his good wishes and hopes that the Jeddah Economic Forum is a success. Today I will be talking to you about the Role of E-Commerce in Developing Business in the context of South Africa and Africa. I will not be giving you a lecture on how to use e-commerce in business, I will leave that to the businesspeople and university professors; as a politician in the Government of the Republic of South Africa I will be looking at the issue from a socio-economic perspective and relating it in particular to the experience that we have had in South Africa.
As we have heard from the earlier speakers today the world is globalising and becoming a smaller place. More and more countries and businesses are entering the global marketplace and trading with each other. Over the past eight to ten years global trade has doubled and despite the current global slowdown that some of the advanced industrialised nations are experiencing, this growth is set to continue. This growth in trade is the result of a number of factors that includes, modern information systems, new communication technologies; improved transport mechanisms, the existence of international trade bodies such as the World Trade Organisation and the World Customs Organisation, and of course the rise of electronic commerce or e-commerce.
E- commerce, for me is the electronic exchange of trade related information for the purposes of buying and selling goods and services. In addition e-commerce is used to market companies through posting of and searching for business information on the World Wide Web or Internet, identifying business opportunities through searchable databases, using e-mail to communicate with business associates, exchanging business information and ultimately using the Internet to actually do an electronic transactions by ordering goods and services and paying for them online.
Today there is less hype about e-commerce if one compares it to what was happening three or four years ago when there was speculation of an exponential growth in e-commerce transactions. Part of this shift is that the bottom fell out of the technology market when the Internet bubble burst and part of it is that businesses have started to realise the limitations of e-commerce. There is no doubt that e-commerce is an important business tool but the fundamental principles of business remain the same - you do business with people that you know and people that you trust. The belief that some random buyer will go into a businesses web page, look at their competitive prices and place a huge order through the Internet without knowing anything about the product or the company is a fallacy. However, many businesses were lured into believing this about e-commerce by the strong sales pitches used by the companies selling e-commerce products. It was an attractive idea that saw a lot of money being spent but at the end of the day there was not a great deal of return on investment. Where the success of e-commerce started to occur was in cementing and improving existing trading relationships - all the benefits of faster transaction time, less paperwork, improved tracking of purchases and sales, etc could be gained but businesses would still have to use traditional marketing strategies to find buyers and maintain relationships. Within this context of improving existing trading relationships one of the most important areas of e-commerce has been in improving, consolidating and managing supply chains.
With globalisation these supply chains are increasingly becoming international or global. Which, for me, is the point where there is convergence between globalisation, e-commerce and a small country such as South Africa.
Since it became a democracy in 1994, South Africa has had a lot of work to do by concurrently establish a democratic dispensation, opening up our borders, entering the global economy, playing a leading role in Africa, which I will talk more about later in the speech, and growing our economy and creating jobs so as to improve the situation of our people and our country.
We have made a lot of progress in most of these areas, we have an finalised our constitution, introduced a significant amount of new legislation, brought down trade tariffs, grown our manufactured exports by on average 7% per annum, maintained our traditional mineral exports, assisted in the resolution of several conflicts in Africa, played a leading role in African Union and the New Partnership for Africa's Development, and consistently achieved a positive economic growth rate. Our one key area of weakness is that we have not been able to create enough new jobs to replace the ones lost by our industries rationalising in the face of increased international competition and it is only now, eight years since achieving democracy, that we are starting to reverse this negative trend of job losses. There have been short-term negative consequence to entering the global economy but in the medium term we have found that it has put us on a path of more sustainable economic growth.
Two of the industries that I would like to mention where we have become very competitive and are significant exporters are automotive and agro-processing. Both of these industries are extremely sophisticated in their use of e-commerce and both industries have well developed international supply chains. Through a variety of government incentives and support mechanisms that promoted manufacturing, export orientation, and global orientation these industries have over the past few years become suppliers to large international firms. For example, in the automotive industry South Africa manufactures the Mercedes Benz 'C' Class automobile for export and is one of the largest suppliers of catalytic converters. Our automotive businesses also supply a range of other products to international automotive companies such as Toyota, Nissan, Ford, BMW, etc. In the agro-processing industry we have a huge variety of canned goods, processed products in the diary and meat industry, fruit juices, dried fruit, oils, and much more. Our firms are supplying some of the largest supermarket chains in the world and with our currency being undervalued these products are extremely competitive. Using e-commerce and linked to these supply chains our firms are becoming more and more sophisticated and responsive to the needs of the retail chains.
These industries would not have been able to achieve the success that they did were it not for the sophistication of the South African Information and Communication Technology or ICT sector. This sector has been able to support these industries integration into the global supply chains, which as I discussed earlier, are managed by and large through e-commerce. South Africa's ICT sector is not limited to supporting our exporting industries but also for general commercial use, for example we have the highest Internet connectivity rate in Africa. Our ICT sector is also used for academic purposes, private individuals, and very importantly for our well-developed banking and finance sector which is comparable to the most developed countries in the world.
The picture that I have just painted of South Africa is of a very competitive and industrialised country, which is often not the picture that people have of South Africa in their mind. The reality is that South Africa has many facets to it; we have the wonderful beaches, game farms, restaurants, hotels and tourist activities that we have become famous for; we have the first world and top class cities that international business people and visitors to our country would be exposed to; but we also have many people living in impoverished shack settlements and shanty towns, with a significant portion of our people living in poverty in the rural areas.
Our biggest challenge as a government has been to raise the standard of living of all our people, provide skills training, including the ICT sector and ensure that there is a social safety net. We have done a lot of work on this in the past few years, particularly in the provision of education and training, supply of basic infrastructure such as housing, water and electricity and introduction of child care grants, feeding schemes, primary health care, and improvement in the state pension payouts.
The improvements that we have made in our country have come through a lot of hard work, a commitment to good governance from both the public and private sector, fighting corruption, adopting stable macro-economic policies, and very importantly buy in from all sectors of society to the changes in our country. Such buy in is obtained through negotiating forums that bring together our very strong civil society, labour unions, corporations and the different political parties.
I must add that there has been a very important role played by South African women both politically and economically. I do not believe that our smooth transformation to democracy would have been possible without women nor do I believe that our economy will grow without the active participation of women. I have put these strong beliefs into practice by being a member of the South African government and by actively promoting and supporting women entrepreneurs in my portfolio as Deputy Minister of Trade and Industry. One area where I have been particularly active is in a programme called Technology for Women in Business, which seeks to promote the use of technology by women who are already in business as well as to encourage women to start new businesses in the technology sector. We are running this programme in close collaboration with our national council for scientific and industrial research and are running a parallel programme to encourage girls to pursue a career in science and technology.
The successes that we have had in South Africa and the improvements that we are making are not sustainable in the long term if the situation in other countries in Africa does not improve. It is within this context and with the belief that we want to see the economic and social upliftment of the people on our continent that we have been active in driving and supporting the New Partnership for Africa's Development or NEPAD.
I would therefore like to briefly talk to you about NEPAD as this programme will have a lot of positive implications for the growth and regeneration of Africa.
In order to overcome the poverty that continues to plague many of our countries and people, a number of leaders in Africa have recognised that change needs to take place and that as the African leadership, must drive this change and make the first steps to improve the situation. A vision, a strategic framework and a long term programme for the socio-economic renewal of Africa has been put together to drive this change process and it is called the New Partnership for Africa's Development or NEPAD. This programme was adopted at the 37th Summit of the Organisation of African Unity held in Lusaka in July 2001 and the NEPAD Initial Action Plan was endorsed at the inaugural Summit of the African Union that was held last year in Durban, South Africa.
The overall objective of NEPAD is to eradicate poverty and to place African countries both individually and collectively on a path of sustainable development and growth and to ensure that Africa is no longer on the margins of the global economy. Integrating gender and women issues in the programme is an important element of NEPAD as is reducing the resource gap between the developed and developing countries.
NEPAD is a broad programme and covers three broad areas. First are conditions for sustainable development. This area looks at Peace and Security, Democracy and Political Governance, Economic Governance and Management, Regional Integration and Capacity Building. The second area of NEPAD covers Sectoral Priorities, which includes Market Access, Diversification of Production, Exports, the development of Infrastructure, Health, the Environment, Science and Technology, Agriculture, and Human Resource Development which covers education. Thirdly and very importantly, NEPAD looks at the mobilisation and utilisation of resources for the implementation of these activities. This area covers issues such as domestic savings and investment, debt reduction, overseas development assistance and foreign direct investment.
In implementing these programmes what NEPAD will therefore do is to bring down the risk of doing business in Africa. It will create the conditions favourable toward investment, high economic growth and development. It should also lead to Africa becoming more competitive and moving away from the focus and dependency on single commodities to more diverse and robust economies with a significantly stronger industrial and manufacturing base. Such economies will no doubt be utilising e-commerce and will be well linked into the global economy and global supply chains.
To conclude, ladies, I hope that my presentation today has been informative. As we have seen in South Africa there are many opportunities for the effective utilisation of e-commerce but we need to be cognisant of its limitations and of those who try to oversell its potential. I have also tried to show that in this global economy we cannot allow some countries to be left behind, as it will be to all our detriment. I have briefly spoken to you about Africa's NEPAD programme and how it will improve the situation in Africa. If I had more time available I would have explained how NEPAD will bring about many business opportunities for those trading and engaging with African countries and companies - electronically as well as through traditional business means.
I thank you for listening to me. Shukran.
Issued by the Office of the Deputy Minister of Trade and Industry
Source: Deputy Ministry of Trade and Industry
Title: Hendricks: Jeddah Economic Forum
SPEECH BY THE DEPUTY MINISTER OF TRADE AND INDUSTRY, REPUBLIC OF SOUTH AFRICA, MRS LINDIWE HENDRICKS, AT THE JEDDAH ECONOMIC FORUM, Saudi Arabia, 18 January 2003
THE ROLE OF E-COMMERCE IN DEVELOPING BUSINESS - IN THE CONTEXT OF SOUTH AFRICA AND AFRICA
Members of the Saudi Royal family, political dignitaries, honoured guests, first lady of South Africa, Mrs Zanele Mbeki, programme director, ladies, Asalama alaykum.
The President of South Africa, Mr Thabo Mbeki, sends his good wishes and hopes that the Jeddah Economic Forum is a success. Today I will be talking to you about the Role of E-Commerce in Developing Business in the context of South Africa and Africa. I will not be giving you a lecture on how to use e-commerce in business, I will leave that to the businesspeople and university professors; as a politician in the Government of the Republic of South Africa I will be looking at the issue from a socio-economic perspective and relating it in particular to the experience that we have had in South Africa.
As we have heard from the earlier speakers today the world is globalising and becoming a smaller place. More and more countries and businesses are entering the global marketplace and trading with each other. Over the past eight to ten years global trade has doubled and despite the current global slowdown that some of the advanced industrialised nations are experiencing, this growth is set to continue. This growth in trade is the result of a number of factors that includes, modern information systems, new communication technologies; improved transport mechanisms, the existence of international trade bodies such as the World Trade Organisation and the World Customs Organisation, and of course the rise of electronic commerce or e-commerce.
E- commerce, for me is the electronic exchange of trade related information for the purposes of buying and selling goods and services. In addition e-commerce is used to market companies through posting of and searching for business information on the World Wide Web or Internet, identifying business opportunities through searchable databases, using e-mail to communicate with business associates, exchanging business information and ultimately using the Internet to actually do an electronic transactions by ordering goods and services and paying for them online.
Today there is less hype about e-commerce if one compares it to what was happening three or four years ago when there was speculation of an exponential growth in e-commerce transactions. Part of this shift is that the bottom fell out of the technology market when the Internet bubble burst and part of it is that businesses have started to realise the limitations of e-commerce. There is no doubt that e-commerce is an important business tool but the fundamental principles of business remain the same - you do business with people that you know and people that you trust. The belief that some random buyer will go into a businesses web page, look at their competitive prices and place a huge order through the Internet without knowing anything about the product or the company is a fallacy. However, many businesses were lured into believing this about e-commerce by the strong sales pitches used by the companies selling e-commerce products. It was an attractive idea that saw a lot of money being spent but at the end of the day there was not a great deal of return on investment. Where the success of e-commerce started to occur was in cementing and improving existing trading relationships - all the benefits of faster transaction time, less paperwork, improved tracking of purchases and sales, etc could be gained but businesses would still have to use traditional marketing strategies to find buyers and maintain relationships. Within this context of improving existing trading relationships one of the most important areas of e-commerce has been in improving, consolidating and managing supply chains.
With globalisation these supply chains are increasingly becoming international or global. Which, for me, is the point where there is convergence between globalisation, e-commerce and a small country such as South Africa.
Since it became a democracy in 1994, South Africa has had a lot of work to do by concurrently establish a democratic dispensation, opening up our borders, entering the global economy, playing a leading role in Africa, which I will talk more about later in the speech, and growing our economy and creating jobs so as to improve the situation of our people and our country.
We have made a lot of progress in most of these areas, we have an finalised our constitution, introduced a significant amount of new legislation, brought down trade tariffs, grown our manufactured exports by on average 7% per annum, maintained our traditional mineral exports, assisted in the resolution of several conflicts in Africa, played a leading role in African Union and the New Partnership for Africa's Development, and consistently achieved a positive economic growth rate. Our one key area of weakness is that we have not been able to create enough new jobs to replace the ones lost by our industries rationalising in the face of increased international competition and it is only now, eight years since achieving democracy, that we are starting to reverse this negative trend of job losses. There have been short-term negative consequence to entering the global economy but in the medium term we have found that it has put us on a path of more sustainable economic growth.
Two of the industries that I would like to mention where we have become very competitive and are significant exporters are automotive and agro-processing. Both of these industries are extremely sophisticated in their use of e-commerce and both industries have well developed international supply chains. Through a variety of government incentives and support mechanisms that promoted manufacturing, export orientation, and global orientation these industries have over the past few years become suppliers to large international firms. For example, in the automotive industry South Africa manufactures the Mercedes Benz 'C' Class automobile for export and is one of the largest suppliers of catalytic converters. Our automotive businesses also supply a range of other products to international automotive companies such as Toyota, Nissan, Ford, BMW, etc. In the agro-processing industry we have a huge variety of canned goods, processed products in the diary and meat industry, fruit juices, dried fruit, oils, and much more. Our firms are supplying some of the largest supermarket chains in the world and with our currency being undervalued these products are extremely competitive. Using e-commerce and linked to these supply chains our firms are becoming more and more sophisticated and responsive to the needs of the retail chains.
These industries would not have been able to achieve the success that they did were it not for the sophistication of the South African Information and Communication Technology or ICT sector. This sector has been able to support these industries integration into the global supply chains, which as I discussed earlier, are managed by and large through e-commerce. South Africa's ICT sector is not limited to supporting our exporting industries but also for general commercial use, for example we have the highest Internet connectivity rate in Africa. Our ICT sector is also used for academic purposes, private individuals, and very importantly for our well-developed banking and finance sector which is comparable to the most developed countries in the world.
The picture that I have just painted of South Africa is of a very competitive and industrialised country, which is often not the picture that people have of South Africa in their mind. The reality is that South Africa has many facets to it; we have the wonderful beaches, game farms, restaurants, hotels and tourist activities that we have become famous for; we have the first world and top class cities that international business people and visitors to our country would be exposed to; but we also have many people living in impoverished shack settlements and shanty towns, with a significant portion of our people living in poverty in the rural areas.
Our biggest challenge as a government has been to raise the standard of living of all our people, provide skills training, including the ICT sector and ensure that there is a social safety net. We have done a lot of work on this in the past few years, particularly in the provision of education and training, supply of basic infrastructure such as housing, water and electricity and introduction of child care grants, feeding schemes, primary health care, and improvement in the state pension payouts.
The improvements that we have made in our country have come through a lot of hard work, a commitment to good governance from both the public and private sector, fighting corruption, adopting stable macro-economic policies, and very importantly buy in from all sectors of society to the changes in our country. Such buy in is obtained through negotiating forums that bring together our very strong civil society, labour unions, corporations and the different political parties.
I must add that there has been a very important role played by South African women both politically and economically. I do not believe that our smooth transformation to democracy would have been possible without women nor do I believe that our economy will grow without the active participation of women. I have put these strong beliefs into practice by being a member of the South African government and by actively promoting and supporting women entrepreneurs in my portfolio as Deputy Minister of Trade and Industry. One area where I have been particularly active is in a programme called Technology for Women in Business, which seeks to promote the use of technology by women who are already in business as well as to encourage women to start new businesses in the technology sector. We are running this programme in close collaboration with our national council for scientific and industrial research and are running a parallel programme to encourage girls to pursue a career in science and technology.
The successes that we have had in South Africa and the improvements that we are making are not sustainable in the long term if the situation in other countries in Africa does not improve. It is within this context and with the belief that we want to see the economic and social upliftment of the people on our continent that we have been active in driving and supporting the New Partnership for Africa's Development or NEPAD.
I would therefore like to briefly talk to you about NEPAD as this programme will have a lot of positive implications for the growth and regeneration of Africa.
In order to overcome the poverty that continues to plague many of our countries and people, a number of leaders in Africa have recognised that change needs to take place and that as the African leadership, must drive this change and make the first steps to improve the situation. A vision, a strategic framework and a long term programme for the socio-economic renewal of Africa has been put together to drive this change process and it is called the New Partnership for Africa's Development or NEPAD. This programme was adopted at the 37th Summit of the Organisation of African Unity held in Lusaka in July 2001 and the NEPAD Initial Action Plan was endorsed at the inaugural Summit of the African Union that was held last year in Durban, South Africa.
The overall objective of NEPAD is to eradicate poverty and to place African countries both individually and collectively on a path of sustainable development and growth and to ensure that Africa is no longer on the margins of the global economy. Integrating gender and women issues in the programme is an important element of NEPAD as is reducing the resource gap between the developed and developing countries.
NEPAD is a broad programme and covers three broad areas. First are conditions for sustainable development. This area looks at Peace and Security, Democracy and Political Governance, Economic Governance and Management, Regional Integration and Capacity Building. The second area of NEPAD covers Sectoral Priorities, which includes Market Access, Diversification of Production, Exports, the development of Infrastructure, Health, the Environment, Science and Technology, Agriculture, and Human Resource Development which covers education. Thirdly and very importantly, NEPAD looks at the mobilisation and utilisation of resources for the implementation of these activities. This area covers issues such as domestic savings and investment, debt reduction, overseas development assistance and foreign direct investment.
In implementing these programmes what NEPAD will therefore do is to bring down the risk of doing business in Africa. It will create the conditions favourable toward investment, high economic growth and development. It should also lead to Africa becoming more competitive and moving away from the focus and dependency on single commodities to more diverse and robust economies with a significantly stronger industrial and manufacturing base. Such economies will no doubt be utilising e-commerce and will be well linked into the global economy and global supply chains.
To conclude, ladies, I hope that my presentation today has been informative. As we have seen in South Africa there are many opportunities for the effective utilisation of e-commerce but we need to be cognisant of its limitations and of those who try to oversell its potential. I have also tried to show that in this global economy we cannot allow some countries to be left behind, as it will be to all our detriment. I have briefly spoken to you about Africa's NEPAD programme and how it will improve the situation in Africa. If I had more time available I would have explained how NEPAD will bring about many business opportunities for those trading and engaging with African countries and companies - electronically as well as through traditional business means.
I thank you for listening to me. Shukran.
Issued by the Office of the Deputy Minister of Trade and Industry
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