Date: 10/10/2006
Source: Department of Trade and Industry
Title: Thabethe: Africa Investment Forum
Address by Deputy Minister of Trade and Industry Elizabeth Thabethe at the Africa Investment Forum
Chairperson
Honourable ministers
Distinguished delegates
Ladies and gentlemen
I would like to extend a warm welcome to all of you who have gathered here on this occasion of the fifth Africa Investment Forum. I am pleased to be here to open the Forum. The Department of Trade and Industry (the dti) and Commonwealth Business Council (CBC) have been partners in the last Forums, together with the New Partnership for Africa's Development (NEPAD) Secretariat in our common vision to promote intra-Africa investment and trade flows. Our Forums have contributed considerably to mobilise African capital and to promote intra-Africa trade whether directly or indirectly.
In last year's Forum an undertaking was made to ensure that sentiment gives way to practical solutions. Instead of discussing the same issues, we need to move to "practical conversations". Hence, we need to look for solutions that will impact positively on the continent's ability to attract investment and reduce poverty. There is a need for the Forum to be about more than debate. It should produce tangible targets and not only diagnosis.
Last year was billed the 'Year of Africa', an initiative given impetus especially by United Kingdom (UK) Prime Minister Tony Blair to decisively turn around the fortunes of the continent. The plan was simple: determine what needs to be done, hence Mr Blair's Commission for Africa, which produced a comprehensive report on the subject, and at the same time use the UK's presidency of the Group of Eight (G-8) and European Union (EU) to force Africa up the international agenda. The outcome was mixed. I am therefore glad to see that there will be a session to discuss the impact of G-8 commitments on the continent. I have been informed of the active involvement of the NEPAD Secretariat in these discussions through Prof Mucavele. NEPAD is an agreed socio-economic development framework of the continent and any engagement by the developmental partners of the continent should be through this framework.
The challenges facing the continent are well documented and I would not like to emphasise on them but would like to touch on the critical ones which I hope the Forum will deliberate on. The first one is the inability of the continent to attract foreign direct investment (FDI), limited trade between Africans and trade with the rest of the world, skills development, lack of improvements in the productive capacity of the continent to name but a few.
The limited market size and growth potential (i.e. in terms of per capita income) of our individual markets, skills shortage and poor infrastructure are some of basic primary challenges of attracting foreign direct investment on the continent.
Globally the perception of Africa is generally negative and all too often associated with images of civil unrest, war, poverty, diseases and mounting social problems. International media places an undue emphasis on the negative representations about Africa which does not truly reflect the African continent. This in turn impacts negatively on the ability of African countries to attract Foreign Direct Investment (FDI). Most of FDIs reach mainly developed countries, and the emphasis is on manufacturing and finances. The question is what will happen to less developed countries where the emphasis is primarily on agriculture, extractive industries and public utilities?
The relationship between Africa's economic development and the media has been a weak one. Media coverage of Africa tends to be biased in the sense that reports predominantly focuses on disasters, poverty, diseases and rarely focuses on economic development issues. In this regard it is important that the media make a concerted effort to provide coverage that is fair, unbiased and provides a true reflection of Africa in all its diversity.
Media has a crucial role to play in challenging and altering the negative perceptions about Africa that is necessary if Africa is to secure the FDI required for its growth and development. This can be achieved through the communication of information to the public. The media in its coverage of Africa must provide a balanced picture of the continent reporting on both the positives and the negatives.
A number of African countries have been making serious efforts to liberalise external trade to attract FDI. In 1999, there was an estimated stock of $865 billion worth of foreign direct investment in the world. The developed countries attracted nearly three quarters of the total inflow of FDI. Africa has during the last three decades managed to attract from 8 dollars to almost 15 dollars per $1 000 of Gross Domestic Product (GDP) between 19770-1997. In 2004 Africa managed to only attract $20 billion US dollars compared to $106 billion into Asia and the Pacific and $69 billion into Latin America and the Carribean (United Nations Conference on Trade and Development UNCTAD, 2005).
Africa's geographical, historical and structural features have traditionally attracted FDI into export-oriented primary production activities with limited linkages to the rest of the economy. This situation has not changed much in recent years and has contributed to undermining a self-sustaining and dynamic investment process.
The continent needs to address administrative barriers if it wants to attract FDI. A favourable environment with stable rates and effective competition policies has to be created. Lower transaction and business costs and human resource development with diverse and modern skills are critical to attracting investment. Africa needs resource-driven, market-driven and efficiency-driven FDIs. This is necessary to ensure integration of Africa into the global economy.
However, we cannot integrate with the global economy unless we increase market access and trade within Africa. Integration will increase the market size and potential for learning-by-doing, eventually making African firms more competitive in the international arena. Despite four decades of integration efforts, intra-Africa trade, an important indicator of the intensity of regional integration, accounts for only 10,5% of Africa's total trade.
Central to integration is the inclusion of women in business; women are the backbone of the second economy and make significant contributions to the economy. In recognition of this contribution and to facilitate the integration of women the dti is in the process of presenting its strategy on gender to cabinet. This strategy aims to address the market failures with regards to the empowerment of women.
As part of Accelerated and Shared Growth Initiative for South Africa (AsgiSA) it is further aimed at accelerating and ensuring an equitable share of our economy between men and women. Part of the concrete deliverables that will come with this strategy is the launch of the long awaited women's fund. The women entrepreneurs' directory for procurement purposes has already been released. Our strategic framework will also facilitate the proper entrepreneurial skilling of women through the Women Empowerment Programme (WEP). We aim to establish an emporium that will exclusively showcase samples of women's products in order to create markets for women.
To ensure that we monitor the growth of women's enterprises, we commissioned a second national research report on the status quo of women entrepreneurs in order to co-ordinate and plan correctly. To fully capacitate the institutionalisation of women's structures we hope to establish a supportive fund to cover all basic costs of supportive women's organisations.
South African Women's Entrepreneurs Network (SAWEN) is our vehicle to expose more women to the national and global economy. As part of doing business with the rest of the world, we have alliances with other critical women's business organisations in Africa and Europe. Nationally we have established offices that provide counselling, advice and networking services for women entrepreneurs. We have been forced to be creative in our approach to create an enabling environment for women to join the mainstream economy due to a devastating legacy left by three centuries of colonialism and institutionalised oppression.
Ladies and gentlemen, in confronting the challenges of African economic development we must also ensure that development is sustainable. As we celebrate the fact that, Africa is on a dynamic path of economic growth, we must participate fully in processes that will assist our countries in attracting trade and investment as well as increasing Africa's global share of exports. These relate to challenges involved in moving goods across borders, the high costs of transport, inadequate infrastructure, the lack of financial and human resources and a host of social factors that conspire to inhibit growth.
Furthermore, Africa's exports remain stubbornly in the agricultural products, minerals and commodities basket. To succeed in expanding our global share of exports not only is it necessary to diversify exports but also to ensure that Africa can compete internationally. Simply put, we must find ways that can add value to our natural resources so that we do not export them only to buy finished products made from the same resources from the same countries we exported to.
Africa is not a poor continent; it is rich in natural resources. In light of these riches, the diversification of our exports base through beneficiation is a necessity rather than a "nice to have" if we are to move away from our historical dependency on mineral extraction and commodity production. We will therefore need to find innovative and creative ways of adding value to our exports that will meet the needs of global market demand. To find and develop such innovation is far from impossible.
Having highlighted the challenges, I would like to emphasise that it is not all doom and gloom. African states are building a new architecture of institutions, such as the African Union, and showing their determination to resolve long-standing conflicts and new emergencies. Most African countries are at peace, and have more democratically elected governments than ever before. Many are experiencing macro-economic stabilisation, rapid economic and social recovery, constitutional and civil reforms.
The discovery of oil in many African countries may also be attributed to the macro-economic stabilisation experienced in Africa (though a mixed blessing). African countries are taking concrete steps towards integrating their economies, building regional communities, adopting common currencies and increasing trade with each other enabling them to benefit from larger markets. As we speak, initiatives are under way to promote regional economic integration on the continent.
However, as we celebrate these achievements we need to also address the challenges that are still facing us as the continent. I hope as you deliberate in your discussion you will offer practical solutions to the challenges identified above.
The Africa Investment Forum is based on the view that the private sector has a central role to play and can be the catalytic agent of growth and development. Hence it is critically important for business and the state to work closely together. It focuses on challenges and market constraints that are limiting growth and development and encourages the establishment of partnerships in dealing with market reforms.
One of the key objectives of NEPAD is to mobilise resources through partnerships for Africa's development, hence the Capital Flows Initiative was launched. The aim of the initiative is to achieve the estimated seven per cent annual growth rate needed to meet the Millennium Development Goals (MDGs), particularly the goal of reducing by half the proportion of Africans living in poverty by the year 2015. The initiative involves plans to increase domestic savings, as well as improvements in the public revenue collection systems. However, the bulk of the needed resources will have to be obtained from outside the continent.
NEPAD focuses on debt reduction and Official Development Assistance (ODA) as complementary external resources required in the short to medium term, and addresses private capital flows as a longer-term concern. A basic principle of the Capital Flows Initiative is that improved governance entrenched in the African Peer Review Mechanism (APRM) process, is a necessary requirement for increased capital flows. Participation in the Economic and Political Governance Initiatives is therefore a prerequisite for participation in the Capital Flows Initiative.
The priority identified though this initiative is to address investors' perceptions of Africa as a "high risk" investment destination, especially with regard to security of property rights, regulatory framework and markets. The next priority is the implementation of a public-private sector partnership (PPP) capacity-building programme through the African Development Bank and other regional development institutions, to assist national and sub-national governments in structuring and regulating transactions in the provision of infrastructural and social services. The third priority is to promote the deepening of financial markets within countries, as well as cross-border harmonisation and integration.
It is therefore critical for business to ask itself what will be its role in the economic development of the continent. The world sees vast opportunities in the continent, which is why South Africa has been afforded the opportunity to host the 2010 World Cup. While public sector investment remains critical the private sector needs to grab the opportunities presented by this with both hands to create an environment conducive for development. Business must take the lead and create opportunities for growth. The continent will not succeed from public sector investment alone.
The 2010 World Cup is expected to lead to direct expenditure of approximately R12,7 billion; and contribute R21,3 billion to the GDP of South Africa. It is expected to create new employment opportunities; and generate additional revenues. The challenge is to ensure the broad based benefit to the South African society. Hence, we need to ensure that small medium and micro enterprises (SMMEs) also benefit from this opportunity.
I am sure the Minister of Sport and Recreation will emphasise this point during his intervention during the Forum. But I also felt that it is necessary that I also touch on it, South Africa is ready for 2010, this point cannot be emphasised enough. Our President has assured the soccer fraternity and I would also like to do the same. There is no way South Africa and hence Africa will let the opportunity go wasted. As the host of 2010, South Africa carries the hopes of all Africans and the continent will come together to ensure that South Africa successfully holds the Soccer World Cup.
In conclusion, the contribution of the private sector and the SMMEs to the growth of the continent in terms of output and job creation is enormous. In this regard, there is a need to address the practical and real concerns of entrepreneurs. This is essential to empowering the private sector and to grow SMMEs. Forums like these create a platform for us to dialogue and address key issues that impact on the economic growth of the continent, hence the need to focus on practical solutions that will add value to people at grassroots level.
I wish you successful deliberations that will bear tangible outcomes. I thank you!
Enquiries:
Henriette van der Merwe
Tel: (012) 394 1640
Cell: 072 316 5533
Bongani Lukhele
Tel: (012) 394 1643
Cell: 083 291 8689
Bethuel Mnguni Tel: (012) 394 1647 Cell: 083 624 8888 Issued by: Department of Trade and Industry 10 October 2006
Source: Department of Trade and Industry
Title: Thabethe: Africa Investment Forum
Address by Deputy Minister of Trade and Industry Elizabeth Thabethe at the Africa Investment Forum
Chairperson
Honourable ministers
Distinguished delegates
Ladies and gentlemen
I would like to extend a warm welcome to all of you who have gathered here on this occasion of the fifth Africa Investment Forum. I am pleased to be here to open the Forum. The Department of Trade and Industry (the dti) and Commonwealth Business Council (CBC) have been partners in the last Forums, together with the New Partnership for Africa's Development (NEPAD) Secretariat in our common vision to promote intra-Africa investment and trade flows. Our Forums have contributed considerably to mobilise African capital and to promote intra-Africa trade whether directly or indirectly.
In last year's Forum an undertaking was made to ensure that sentiment gives way to practical solutions. Instead of discussing the same issues, we need to move to "practical conversations". Hence, we need to look for solutions that will impact positively on the continent's ability to attract investment and reduce poverty. There is a need for the Forum to be about more than debate. It should produce tangible targets and not only diagnosis.
Last year was billed the 'Year of Africa', an initiative given impetus especially by United Kingdom (UK) Prime Minister Tony Blair to decisively turn around the fortunes of the continent. The plan was simple: determine what needs to be done, hence Mr Blair's Commission for Africa, which produced a comprehensive report on the subject, and at the same time use the UK's presidency of the Group of Eight (G-8) and European Union (EU) to force Africa up the international agenda. The outcome was mixed. I am therefore glad to see that there will be a session to discuss the impact of G-8 commitments on the continent. I have been informed of the active involvement of the NEPAD Secretariat in these discussions through Prof Mucavele. NEPAD is an agreed socio-economic development framework of the continent and any engagement by the developmental partners of the continent should be through this framework.
The challenges facing the continent are well documented and I would not like to emphasise on them but would like to touch on the critical ones which I hope the Forum will deliberate on. The first one is the inability of the continent to attract foreign direct investment (FDI), limited trade between Africans and trade with the rest of the world, skills development, lack of improvements in the productive capacity of the continent to name but a few.
The limited market size and growth potential (i.e. in terms of per capita income) of our individual markets, skills shortage and poor infrastructure are some of basic primary challenges of attracting foreign direct investment on the continent.
Globally the perception of Africa is generally negative and all too often associated with images of civil unrest, war, poverty, diseases and mounting social problems. International media places an undue emphasis on the negative representations about Africa which does not truly reflect the African continent. This in turn impacts negatively on the ability of African countries to attract Foreign Direct Investment (FDI). Most of FDIs reach mainly developed countries, and the emphasis is on manufacturing and finances. The question is what will happen to less developed countries where the emphasis is primarily on agriculture, extractive industries and public utilities?
The relationship between Africa's economic development and the media has been a weak one. Media coverage of Africa tends to be biased in the sense that reports predominantly focuses on disasters, poverty, diseases and rarely focuses on economic development issues. In this regard it is important that the media make a concerted effort to provide coverage that is fair, unbiased and provides a true reflection of Africa in all its diversity.
Media has a crucial role to play in challenging and altering the negative perceptions about Africa that is necessary if Africa is to secure the FDI required for its growth and development. This can be achieved through the communication of information to the public. The media in its coverage of Africa must provide a balanced picture of the continent reporting on both the positives and the negatives.
A number of African countries have been making serious efforts to liberalise external trade to attract FDI. In 1999, there was an estimated stock of $865 billion worth of foreign direct investment in the world. The developed countries attracted nearly three quarters of the total inflow of FDI. Africa has during the last three decades managed to attract from 8 dollars to almost 15 dollars per $1 000 of Gross Domestic Product (GDP) between 19770-1997. In 2004 Africa managed to only attract $20 billion US dollars compared to $106 billion into Asia and the Pacific and $69 billion into Latin America and the Carribean (United Nations Conference on Trade and Development UNCTAD, 2005).
Africa's geographical, historical and structural features have traditionally attracted FDI into export-oriented primary production activities with limited linkages to the rest of the economy. This situation has not changed much in recent years and has contributed to undermining a self-sustaining and dynamic investment process.
The continent needs to address administrative barriers if it wants to attract FDI. A favourable environment with stable rates and effective competition policies has to be created. Lower transaction and business costs and human resource development with diverse and modern skills are critical to attracting investment. Africa needs resource-driven, market-driven and efficiency-driven FDIs. This is necessary to ensure integration of Africa into the global economy.
However, we cannot integrate with the global economy unless we increase market access and trade within Africa. Integration will increase the market size and potential for learning-by-doing, eventually making African firms more competitive in the international arena. Despite four decades of integration efforts, intra-Africa trade, an important indicator of the intensity of regional integration, accounts for only 10,5% of Africa's total trade.
Central to integration is the inclusion of women in business; women are the backbone of the second economy and make significant contributions to the economy. In recognition of this contribution and to facilitate the integration of women the dti is in the process of presenting its strategy on gender to cabinet. This strategy aims to address the market failures with regards to the empowerment of women.
As part of Accelerated and Shared Growth Initiative for South Africa (AsgiSA) it is further aimed at accelerating and ensuring an equitable share of our economy between men and women. Part of the concrete deliverables that will come with this strategy is the launch of the long awaited women's fund. The women entrepreneurs' directory for procurement purposes has already been released. Our strategic framework will also facilitate the proper entrepreneurial skilling of women through the Women Empowerment Programme (WEP). We aim to establish an emporium that will exclusively showcase samples of women's products in order to create markets for women.
To ensure that we monitor the growth of women's enterprises, we commissioned a second national research report on the status quo of women entrepreneurs in order to co-ordinate and plan correctly. To fully capacitate the institutionalisation of women's structures we hope to establish a supportive fund to cover all basic costs of supportive women's organisations.
South African Women's Entrepreneurs Network (SAWEN) is our vehicle to expose more women to the national and global economy. As part of doing business with the rest of the world, we have alliances with other critical women's business organisations in Africa and Europe. Nationally we have established offices that provide counselling, advice and networking services for women entrepreneurs. We have been forced to be creative in our approach to create an enabling environment for women to join the mainstream economy due to a devastating legacy left by three centuries of colonialism and institutionalised oppression.
Ladies and gentlemen, in confronting the challenges of African economic development we must also ensure that development is sustainable. As we celebrate the fact that, Africa is on a dynamic path of economic growth, we must participate fully in processes that will assist our countries in attracting trade and investment as well as increasing Africa's global share of exports. These relate to challenges involved in moving goods across borders, the high costs of transport, inadequate infrastructure, the lack of financial and human resources and a host of social factors that conspire to inhibit growth.
Furthermore, Africa's exports remain stubbornly in the agricultural products, minerals and commodities basket. To succeed in expanding our global share of exports not only is it necessary to diversify exports but also to ensure that Africa can compete internationally. Simply put, we must find ways that can add value to our natural resources so that we do not export them only to buy finished products made from the same resources from the same countries we exported to.
Africa is not a poor continent; it is rich in natural resources. In light of these riches, the diversification of our exports base through beneficiation is a necessity rather than a "nice to have" if we are to move away from our historical dependency on mineral extraction and commodity production. We will therefore need to find innovative and creative ways of adding value to our exports that will meet the needs of global market demand. To find and develop such innovation is far from impossible.
Having highlighted the challenges, I would like to emphasise that it is not all doom and gloom. African states are building a new architecture of institutions, such as the African Union, and showing their determination to resolve long-standing conflicts and new emergencies. Most African countries are at peace, and have more democratically elected governments than ever before. Many are experiencing macro-economic stabilisation, rapid economic and social recovery, constitutional and civil reforms.
The discovery of oil in many African countries may also be attributed to the macro-economic stabilisation experienced in Africa (though a mixed blessing). African countries are taking concrete steps towards integrating their economies, building regional communities, adopting common currencies and increasing trade with each other enabling them to benefit from larger markets. As we speak, initiatives are under way to promote regional economic integration on the continent.
However, as we celebrate these achievements we need to also address the challenges that are still facing us as the continent. I hope as you deliberate in your discussion you will offer practical solutions to the challenges identified above.
The Africa Investment Forum is based on the view that the private sector has a central role to play and can be the catalytic agent of growth and development. Hence it is critically important for business and the state to work closely together. It focuses on challenges and market constraints that are limiting growth and development and encourages the establishment of partnerships in dealing with market reforms.
One of the key objectives of NEPAD is to mobilise resources through partnerships for Africa's development, hence the Capital Flows Initiative was launched. The aim of the initiative is to achieve the estimated seven per cent annual growth rate needed to meet the Millennium Development Goals (MDGs), particularly the goal of reducing by half the proportion of Africans living in poverty by the year 2015. The initiative involves plans to increase domestic savings, as well as improvements in the public revenue collection systems. However, the bulk of the needed resources will have to be obtained from outside the continent.
NEPAD focuses on debt reduction and Official Development Assistance (ODA) as complementary external resources required in the short to medium term, and addresses private capital flows as a longer-term concern. A basic principle of the Capital Flows Initiative is that improved governance entrenched in the African Peer Review Mechanism (APRM) process, is a necessary requirement for increased capital flows. Participation in the Economic and Political Governance Initiatives is therefore a prerequisite for participation in the Capital Flows Initiative.
The priority identified though this initiative is to address investors' perceptions of Africa as a "high risk" investment destination, especially with regard to security of property rights, regulatory framework and markets. The next priority is the implementation of a public-private sector partnership (PPP) capacity-building programme through the African Development Bank and other regional development institutions, to assist national and sub-national governments in structuring and regulating transactions in the provision of infrastructural and social services. The third priority is to promote the deepening of financial markets within countries, as well as cross-border harmonisation and integration.
It is therefore critical for business to ask itself what will be its role in the economic development of the continent. The world sees vast opportunities in the continent, which is why South Africa has been afforded the opportunity to host the 2010 World Cup. While public sector investment remains critical the private sector needs to grab the opportunities presented by this with both hands to create an environment conducive for development. Business must take the lead and create opportunities for growth. The continent will not succeed from public sector investment alone.
The 2010 World Cup is expected to lead to direct expenditure of approximately R12,7 billion; and contribute R21,3 billion to the GDP of South Africa. It is expected to create new employment opportunities; and generate additional revenues. The challenge is to ensure the broad based benefit to the South African society. Hence, we need to ensure that small medium and micro enterprises (SMMEs) also benefit from this opportunity.
I am sure the Minister of Sport and Recreation will emphasise this point during his intervention during the Forum. But I also felt that it is necessary that I also touch on it, South Africa is ready for 2010, this point cannot be emphasised enough. Our President has assured the soccer fraternity and I would also like to do the same. There is no way South Africa and hence Africa will let the opportunity go wasted. As the host of 2010, South Africa carries the hopes of all Africans and the continent will come together to ensure that South Africa successfully holds the Soccer World Cup.
In conclusion, the contribution of the private sector and the SMMEs to the growth of the continent in terms of output and job creation is enormous. In this regard, there is a need to address the practical and real concerns of entrepreneurs. This is essential to empowering the private sector and to grow SMMEs. Forums like these create a platform for us to dialogue and address key issues that impact on the economic growth of the continent, hence the need to focus on practical solutions that will add value to people at grassroots level.
I wish you successful deliberations that will bear tangible outcomes. I thank you!
Enquiries:
Henriette van der Merwe
Tel: (012) 394 1640
Cell: 072 316 5533
Bongani Lukhele
Tel: (012) 394 1643
Cell: 083 291 8689
Bethuel Mnguni Tel: (012) 394 1647 Cell: 083 624 8888 Issued by: Department of Trade and Industry 10 October 2006
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