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South-South Cooperation: The Indo-South African Relationship

13th July 2010

By: In On Africa IOA

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At the beginning of June 2010, South African President Jacob Zuma paid his first presidential visit to an Asian country since taking office in May 2009. Emphasising the importance of South-South cooperation and a new "look east" foreign policy, Zuma chose India as the country of choice to visit in order to strengthen bilateral and trade relations. Furthermore, India has a long history of political and economic relations with South Africa, going back 150 years when the first Indian diaspora arrived. As such, this article will examine the Indo-South African relationship, focusing specifically on current political and economic relations, as well as Zuma's recent visit to India.


India and South Africa - History and Current Relations

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The Republic of India was in the forefront of the international community in supporting the anti-apartheid struggle in the Republic of South Africa ever since Mahatma Gandhi started his Satyagraha movement in South Africa more than a century ago. The Asian country was the first to sever trade relations with the apartheid Government in 1946, and subsequently imposed a complete - diplomatic, commercial, cultural and sports - embargo on South Africa.(2) Furthermore, India worked consistently to put the issue of apartheid on the agenda of the United Nations (UN), Non-Alignment Movement (NAM) and other multilateral organisations and for the imposition of comprehensive international sanctions against the country.


Following a commencement of talks between the then South African Government and the African National Congress (ANC), India's relations with South Africa were restored after four decades with the opening of a cultural centre in Johannesburg in May 1993. Thus, against the background of India's consistent support to the anti-apartheid struggle, close and friendly relations - strategic, political, economic and cultural - between the two countries have subsequently been consolidated. Various bilateral agreements have also been concluded between India and South Africa in diverse areas ranging from economic and commercial cooperation, defence, culture, health, human settlements, public administration, science and technology, and education.

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Bilateral trade has grown exponentially from US$ 3 million in 1992-1993 to US$ 4 billion in 2005-2006 and approximately US$ 7.5 billion in 2008-2009. The two Governments have targeted trade to increase to US$ 10 billion by 2012. Gold bullion constitutes one-third of India's imports from South Africa, while India polishes and processed diamonds from South African mines. The two countries have developed military cooperation by trading arms and with joint exercises and programmes to train forces. Furthermore, India and South Africa share an extensive energy partnership. In February 2010, India imported 1.4 tonnes of South African coal, making it the largest purchaser of coal from the African country.


India has already held four rounds of discussions for a preferential trade agreement (PTA) with the Southern African Customs Union (SACU). Initially, the PTA will have entailed tariff cuts on a limited number of products; however, it could subsequently be expanded into a full-fledged free trade agreement (FTA). In November 2009, India and South Africa agreed to work towards an early conclusion of the India-SACU PTA and bilateral investment promotion and protection agreement (BIPA), to provide a fresh impetus to trade in goods and investment between the two countries.


Speaking at an interaction with Chief Executive Officers (CEO) from South Africa, organised jointly by industry bodies, namely the Confederation of Indian Industries (CII), Ficci and Assocham, in June 2010, South African Minister of Trade Rob Davies stated that the PTA would emphasise complementarity and boost development and industrialisation efforts.(3) Both tariffs and regulatory issues would be addressed by the PTA; however, before an agreement is reached, the two countries want to understand each other's sensitivities. According to Indian Minister of Commerce and Industry Anand Sharma, the agreement will pave the way for India and South Africa to engage with other African members of SACU (Botswana, Lesotho, Namibia, and Swaziland).


Moreover, Sharma has noted that South Africa is one of the "most attractive destinations for Indian investors and many Indian companies in agro-processing, pharmaceutical, energy, tourism, mining and film industries have established their footprint" in this African country. South African President Jacob Zuma has remarked that South Africa "wishes to expedite negotiations on a preferential trade agreement between India and [SACU], so that [South Africans] may realise the great potential that exists by bringing these two markets closer to each other."(4) The Governments of India and South Africa are thus committed to removing the barriers against trade and investment that exist between them.


In June 2003, India and South Africa also developed trilateral relations with Brazil through the India, Brazil, and South Africa (IBSA) Dialogue Forum. This agreement for South-South cooperation is based on the premise of the three countries being regional powers of Southern Africa, South Asia and South America. The declaration called for extensive tripartite cooperation on strategic, commercial and cultural affairs, the development of a tripartite free trade agreement and a united front (in a bid to increase developing countries' bargaining power) in negotiating with Western countries in the World Trade Organisation (WTO).


Furthermore, these three countries, especially India and South Africa, have called for the reform of the UN Security Council and supported each other's bid for (non-)permanent membership with veto rights. The main reason for why these developing countries want to reform the UN Security Council is that the current configuration of the organisation is not representative of present-day realities - the developed countries, such as France, Germany, Japan and the US, constitute only a minority of the UN's membership, while the developing countries constitute a vast majority of its membership. Hence, reform of the global body would impart greater balance and representativeness to reflect contemporary reality. In June 2010, India and South Africa reiterated support for each other for non-permanent seats in the Security Council and agreed to jointly work for the reforms of the UN (and other Bretton Woods institutions).(5) Manmohan Singh, the Indian Prime Minister, has also asserted that both India and South Africa "support each other's candidatures for the non-permanent seats for the 2011-2012 term" on the Council.(6) Zuma has noted that the developing world cannot "continue to be governed by rules and regulations drawn up in the early or mid 1940s" and that the "world has changed," thus the UN needs to change.(7)


Zuma on an Indian Safari


Jacob Zuma chose India as the first Asian country to visit since being elected as the President of South Africa in 2009. The President, accompanied by a large business delegation and South African Cabinet Ministers, paid a three-day visit to India for talks with his counterpart, Indian President Pratibha Patil, in June 2010. This visit was aimed at strengthening and broadening commercial interaction between the two countries. According to Zuma, on his first day in India, "the visit provide[d] an opportunity to strengthen the strong bilateral relationship that both countries share, while addressing and promoting the importance of trade, industrialisation, agricultural development, transport development, communication and international affairs."(8) The South African President also delivered a keynote address at the re-launch of the India-South CEO Forum on 3 June. According to the Presidency, the launch of the Forum is aimed at boosting investment and trade relations. Hence, the Forum will provide a platform for sustained business interaction and also guide policy issues.


During the visit, the two sides signed three agreements, including a Memorandum of Understanding (MoU) on agricultural cooperation, an air services pact and a MoU of mutual cooperation between the Foreign Service Institute of India and the Diplomatic Academy of South Africa. The air services agreement provides three additional stops for all flights, including Johannesburg, Cape Town and Durban in South Africa and Mumbai and Thiruvananthapuram in India. Furthermore, Zuma and the Indian Prime Minister, Manmohan Singh, mandated the next meeting of the Joint Commission to develop concrete plans for the implementation of the decisions taken by them.


The accompanying business delegation was lead by the newly elected (May 2010) President of Business Unity South Africa, Futhi Mtoba. The delegation met with their Indian counterparts to discuss how to share business opportunities. The delegation represented more than 200 companies in banking, financial services, pharmaceuticals and other industries. Among them were SABMiller, FirstRand, Old Mutual and Sanlam, all of whom already have operations in India. An economist with Efficient Group, Dawie Roodt, stated that it was in South Africa's interest to find business opportunities in India's announced five-year US$ 800 billion infrastructure investment. According to Business Unity South Africa CEO Jerry Vilakazi, the companies have signed business deals; however "many of the obstacles to trade with India have been non-tariff barriers such as regulatory issues" in some industries. Furthermore, there was a lack of appropriate pricing for traded materials, but some of the key insights the delegation made involved using Indian energy sources in South Africa and developing India's road and rail infrastructure.


Conclusion


The visit from Zuma marked a significant moment in the history of Indo-South African relations, especially as the South African President chose India as the first Asian country to visit since being elected president. It signalled the continued commitment of South-South cooperation, the strengthening of mutual support for each other's candidature for a (non-)permanent seat in the reformed UN Security Council and a sustained impetus towards quickening the reform of the UN and international decision-making institutions to reflect contemporary realities.(9)


Since South Africa represents a strategic market for Indian investors wishing to use the country as a stepping stone into Africa - considering the quotes given by Zuma who stated that South Africa views India as a "strategic partner"(10) and that "Africa can be developed as the next economic powerhouse with assistance by both South Africa and India"(11) - the reason for the visit to the Asian country was really about connecting the economic and corporate elites from both countries with the respective Governments acting as the enablers of the pending commercial partnerships.(12) With the business delegation searching for economic ventures with their Indian counterparts, Zuma and Singh encouraged the private sector to increase trade and investment ties. Hence, it seems that India will become an even more important "strategic" partner for the regional power in the future.


Written by: Denine Walters (1) of Consultancy Africa Intelligence

 

NOTES:

(1) Denine Walters is an Analyst in Consultancy Africa Intelligence's Asia Dimension Unit (asia.dimension@consultancyafrica.com)
(2) ‘India-South Africa Relations', High Commission of India to South Africa, 2010, http://www.indiainsouthafrica.com.
(3) ‘South Africa to move ambitiously on PTA: Davies', India Economic Times, 5 June 2010, http://economictimes.indiatimes.com.
(4) ‘Zuma seeks trade agreement with India', Engineering News South Africa, 4 June 2010, https://www.engineeringnews.co.za.
(5) ‘India, South Africa ink three pacts, to jointly spur UN reforms', Indo Asian News Service, 4 June 2010, http://www.aol.in.
(6) ‘India, South Africa sign 3 pacts', The Hindu News Agency, 4 June 2010, http://beta.thehindu.com.
(7) ‘South Africa: President Zuma in India', All Africa News Agency, 4 June 2010, http://www.allafrica.com.
(8) ‘South Africa: Zuma arrives in India', All Africa News Agency, 2 June 2010, http://www.allafrica.com/.
(9) Naidu, S., ‘President Zuma's Indian Safari', Pambazuka News Agency, 10 June 2010, http://pambazuka.org/.
(10) ‘India, South Africa launch CEOs Forum, talks Friday (Roundup)', Indo Asian News Service, 3 June 2010, http://www.india-forums.com/.
(11) ‘India, South Africa can aid Africa's Growth', 4 June 2010, http://sify.com/.
(12) Naidu, S., ‘President Zuma's Indian Safari', Pambazuka News Agency, 10 June 2010, http://pambazuka.org/.

 

 

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