Issued by: Department of Foreign Affairs
Paris 8 June 2000
It is a pleasure and privilege for me to have been invited to join in these discussions today. I would like to talk to you today about Africa.
At the recent EU/Africa Summit in Cairo, President Mbeki outlined the reasons why developed countries should be interested in Africa's development and modernisation. Firstly, it is the morally and politically correct thing to do. One positive spin-off of globalisation is that communications are now so good that no one can be unaware of what is happening around the world, especially in Africa. A second compelling reason to become involved in Africa is to join the fight against poverty and counter the scourge of HIV and AIDS, malaria and tuberculosis. It is also to join the fight against genocide, war and instability.
But in addition, by raising the standards of living of the billions of people in the developing world, the global economy as a whole will surely benefit: OECD members depend for their continued economic growth on the expansion of world markets: What better way of expanding global markets than by building up new markets in Africa and the developing world? Investing in the developing world, and in Africa in particular, is in fact investing in the future. This is why South African businesses are investing so many of our resources in Sub-Saharan Africa. I might add that many of these South Africans are not particularly altruistic, and are in fact making a lot of money. Since 1990, the profit levels of foreign companies in Africa have averaged 29%, higher than any other region. That being said, we do believe in the future of the continent despite the pockets of instability and conflicts in some parts of the continent.
We genuinely believe that an historic process has begun which will gain the upper hand in all of Africa and that is why we are prepared to commit our resources to this in support of this ideal. I would invite you to draw encouragement from the fact that the vast majority of Africans, despite the very adverse setbacks in some quarters, are serious about good governance and economic development. There have been 42 multi-party elections around Africa since the early 1990s. There are more elected governments in that continent today than at any other time in her history. The continent's leadership has pronounced itself against unconstitutional governments, but has also acted against the Comoros and Cote d'Ivoire military governments. In this, they are showing their commitment to the rule of law.
At this stage I want to draw your attention to the cover of "The Economist" of 13 May. If you can recall, the cover had a picture of the outline of the African continent, with an African holding a powerful-looking weapon over his shoulder and the heading "The Hopeless Continent". Now with characterisation of Africa as a hopeless continent in mind, I want us to look briefly at our neighbour Mozambique: Not many years ago, it was classified by the World Bank as the poorest country in the entire world. It was also for many years ravaged by civil war. That civil war is now over and the former rebels are now a respectable political party. A multi-party democracy is in fact in place. Economic growth in Mozambique, although staring from a very low base, has been strong, and the country has been making good progress in building up its economy. The GDP growth in 1997 was 11,3%, in 1998 12,1%, among the highest in the world. Of course they have inherited certain problems such as a vast number of landmines left over from the civil war, but together with the international community, they are coping with these. In addition the recent devastating floods have tended to obscure the progress that has been made.
By omission the OECD can be said to be as pessimistic, as its 1998 Annual Report, which is an excellent document, makes no reference whatsoever to any country in Africa. The OECD is, after all, concerned with world economic trends and statistics, and the omission unfortunately can be read to mean that Africa is not a significant part of these at all. It does, however, have 700 million people as well as substantial portions of the world's reserves of raw materials and surely we can all agree that it is a continent with great potential.
I do not wish in any way to gloss over the very obvious problems that we see on our television screens every day: The regional conflicts, the civil wars, the atrocities, and the general mismanagement in certain countries. Nevertheless I do submit that it is unwise to generalise about Africa. In my view, beginning perhaps with the democratic peaceful transition of my country to democracy, there has developed in Africa a widespread acceptance of the need for good governance, representative government, and equitable economic development.
I would like to share with you today some thoughts on how South Africa sees Africa. South Africa, which is a lower middle-income nation, to use World Bank terms, has a GDP of $126 billion, and a population of approximately 40 million. We have a reasonably well-developed infrastructure, which in some instances compares favourably to that of a number of your own members. We have managed to achieve an economic growth rate of around 3,5% this year with similar growth in the next four years. We have, as I am sure you are aware, some serious developmental challenges, and a very skewed economy in terms of the distribution of wealth. We are tackling these challenges in a controlled and consensual way.
We are an integral part of Africa, and particularly of the Southern Africa region. Through our membership of the Southern African Development Community (SADC) we are actively promoting regional economic integration as one of the ways of improving the lives of all our citizens, and we are working closely with our fellow members of SADC to develop the infrastructure of the region. Our strategy is to use our limited capacity to strengthen the countries of the region through trade and investment and integrated infrastructure. The SADC region represents a market of 170 million people, and we believe it will become increasingly attractive to foreign investors.
In other parts of Africa a similar strategy is being followed and eventually through the building blocks of regional organisations, closer ties between the countries of the continent as a whole will be possible. In the SADC region, apart from the infrastructural and the general economic integration, South Africa is supporting a number of what we call "spatial development initiatives", which are integrated cross-sectoral approaches to the development of various areas in the region, and South African businessmen and financiers are becoming increasingly involved in countries, not only in the SADC region but throughout Africa.
In general, however, there has so far been a problem of attracting foreign direct investment (FDI) both into Africa and SADC. Even South Africa, which is generally regarded as a good example of a democratic system, has been affected by this general trend.Thus in a very promising spatial development initiative such as the corridor linking the Mozambican port of Maputo to the industrial heartland of South Africa around Johannesburg, the South African Government has been called on to underwrite the large investments that have been made by the private sector in the various components of this corridor. The Mozal Aluminium Smelter in Maputo Mozambique alone represents an investment of $1,4 billion and should be a major source of economic benefit to that region. Of course it benefits from South African electrical power, which is among the cheapest in the world. Mozambique is an interesting case. There are other similar opportunities for foreign direct investments which we believe can be taken advantage of. We are not asking others to be involved alone, we have taken the lead as government and business in South Africa because we are convinced that this is right.
The World Bank report for 2000 is revealing: None of the top ten borrowers for 1999 is from Africa. In fact, only 7% of the Bank's lendings (IBRD and IDA) in 1999 went to Africa. Bearing in mind the debt situation of so many countries in Africa, and their very limited absorptive capacity, this is perhaps not surprising, and I should also mention that South Africa, which you might think would potentially be a large borrower from the World Bank, has chosen not to use this source of financing. I mention the percentage of 7% of the total of Africa, merely as a symptom of a serious situation that needs to be examined. I would have thought that the greatest development challenge in the world today surely lies in Africa. Yet, the major international body charged with economic development, the World Bank, is currently devoting most of its resources to relatively better-off parts of the world. Let us add to this the fact that some of the structural adjustment programmes recommended for African countries have been less than successful, and have resulted in some cases in the countries being worse off than before.
One aspect of this is the trade situation. South Africa is very keen to see the next round of WTO negotiations proceed and we are currently in discussion with a number of countries, some of them present here today, to see how we can jointly move the process forward. We would like the new Round to have a pronounced developmental dimension, with the aim of achieving better market access in agriculture, industrial and other beneficiated products and services for developing countries. We are firmly of the view that an equitable rules-based system that gives fair market access to all is a more desirable state of affairs and we are doing our best to work towards this. We deem it important that there be an understanding of the special needs of developing countries, which by definition are starting from a much lower economic bas!e than the developed countries.
We seek acknowledgement of the fact that, with the global village as our marketplace, there cannot be continued selective protection of access to markets for political motives. We therefore also call for the full implementation of the Uruguay Round commitments to dismantle trade barriers. We are not calling for charity for developing countries. What we are rather calling for are enhanced export opportunities for developing countries and improved market access, in order that they might improve their living standards through strong export growth to the levels enjoyed in the industrial world. Developing countries need to be allowed to build up their skills and manufacturing capacities, particularly through the production and export of value added goods.
Let me now turn to the question of official development assistance, so vital for building up the governments and the economies of the least developed countries. We have all seen the decline in levels of ODA since the end of the Cold War. I believe that aid levels from OECD countries have fallen from 0,33% of GDP in 1992 to 0,24% today. This is a disappointing situation although it is a positive sign that OECD DAC members' ODA rose by 9,6% in real terms in 1998. Devoting development assistance to developing countries is to invest in the future through the creation of new markets. The Development Assistance Committee is highly regarded and much appreciated. The UN target of 0,7% of GDP for ODA is indeed attainable, as some OECD members have demonstrated. I would appeal to all of you to examine why this cannot become the rule rather than the exception.
Turning once again to your Annual Report, I am struck by the fact that one of your main objectives is to contribute to the development of the world economy, as well as sound economic expansion in non-member countries. I think this is very commendable, and I note the good work being done by the OECD in the field of development.
It is encouraging indeed to note the extent to which the need for debt relief for the very poor countries of the world has become generally accepted. In the case of Mozambique, it is vital that the burden of debt be lifted from them so that they can concentrate on poverty eradication. But of course debt relief is only the first step for many of these countries: With the debt burden lifted, what they then need is development assistance and investment so that they can rise to their feet and begin the task of addressing their developmental back-logs.
Thank you.