Mr Scott Eisner, President of the US-Africa Business Center, US Chamber of Commerce,
Mr Stephen Kehoe, Chair, US-Africa Business Center,
Mr Cas Coovadia, Chief Executive Officer, Business Unity South Africa,
Honoured guests, colleagues and friends,
Thank you for the opportunity to spend some time with you today, in this conversation with American business representatives.
As business leaders, you will be aware of the global challenges that provide the backdrop against which your companies seek to grow and provide a return to investors.
These global challenges include climate change, which is reshaping policy agendas and firm-level strategies. These challenges include technological innovation, including the rise of artificial intelligence, and more complex geo-politics, characterised by heightened tension between global powers.
Global prosperity has been founded on greater levels of openness and engagement between nations and people.
In recent decades, a more open, rules-based trading system, complemented by deeper levels of cross-border investment, has helped to sustain and grow global GDP. It has helped to increase employment in many countries and spur innovation and new technologies.
Yet the heightened tension of this moment has led to fragmentation, hostility and increasing protectionism.
For South Africa, a divided world is not a good thing. We are a trading nation, with above average trade-to-GDP ratios. A significant part of our economic growth is driven by exports.
We believe that the voices advocating greater dialogue and continued economic engagement between nations need to be strengthened.
Multilateralism has served humanity well. While the rules have not always been appropriate for many developing economies, particularly on the African continent, they are better than unilateralism and the exercise of might.
It is far better to change the rules and make them fairer than to live in a world without rules.
We have an ambitious trade and investment agenda.
First, we are finalising the modalities for the imminent launch of trade under the African Continental Free Trade Area.
We expect that the first goods to be traded under this free trade pact would commence within the next six months or sooner.
The AfCFTA as it is called, will cover 1.3 billion consumers in countries possessing some of the world’s most valuable minerals and raw materials.
Second, we are working with the US Administration to make the case for the extension of AGOA to current beneficiary countries, for a further period of 10 years, prior to its expiry in 2025.
The US remains a very important economic partner in trade and investment, with great potential to further expand economic ties.
There are a reported 600 US firms based in South Africa, and more firms will find value in being present in South Africa in the next phase of our growth.
According to the US Bureau of Economic Analysis, US firms in South Africa generate over $30 billion of revenue per annum.
Third, we have an Economic Partnership Agreement with both the European Union and the United Kingdom. Trade flows continue to be very significant. Exports of manufactured goods, particularly of automotive products, have grown.
Fourth, we are expanding our trade links with countries in the Middle East, ASEAN, Mercosur and within the BRICS group. These include some of the fastest-growing economies. They are a source of capital for our industry and markets for our goods.
Accompanying this trade agenda, we have embarked on far-reaching economic reforms.
The energy market is being restructured. The public electricity utility, Eskom, which has faced severe challenges, has improved maintenance of its generation fleet and has received debt relief from the State to strengthen its financial position. Private energy generation, specifically in renewables, constitutes a growing share of total energy generated.
Since the implementation of regulatory changes the pipeline of private sector generation projects has increased to over 100 projects representing more than 10,000 MW of new capacity.
South Africa’s location requires an efficient transport logistics system. This is to enable us to move goods between the main industrial heartland and port cities and to act as the hub for moving products from and to other African countries.
Following a period of under-investment in ports and rail infrastructure, we are now working closely with the private sector to use the wider pool of skills available to improve the logistics system.
The economic reform agenda is also focused on expanding our industrial capacity. The availability of critical raw materials in South Africa and in neighbouring countries is driving efforts to expand high-value manufacturing. This is a real opportunity for more US investment that can leverage off the demonstrated manufacturing base of South Africa.
African growth rates provide a stable growth in aggregate demand over the next decade and more. As the recently published African Economic Outlook for 2023 noted:
“Growth is projected to rebound to 4 percent in 2023 and consolidate at 4.3 percent in 2024, underpinning Africa’s continued resilience to shocks.”
The report goes on to say:
“Africa is endowed with 30 percent of the world’s mineral resources and 65 percent of the world’s uncultivated arable land, the world’s most productive forests both in timber and carbon retention resources, and ample solar, wind, and hydropower.”
With this kind of potential, savvy investors will be expanding, as I noted earlier, their base in South Africa and the rest of the continent.
Our economic reform agenda also includes targeted measures to open the market for more South Africans to participate.
What we refer to as transformation of the economy helps to build long-term stability and growth. Our efforts to open digital markets represent an example of this, as does the use of flexible measures such as the equity equivalent investment programme that a number of US corporations, most recently CitiBank, have used.
And so too the efforts to provide share ownership options to employees in companies, as has been done by Pepsico in South Africa. These are all examples of good corporate practices to broaden economic participation and ensure sustainability.
I spoke earlier of industrialisation. This is a big focus for us. I must commend companies like Coca-Cola who have embraced it fully and have been strong and reliable partners in development of the local industrial capacity in the South African economy. We look forward to more companies following this example.
Skills development is both a necessity in a period of fast-changing human resource needs of firms, and an opportunity for us. We have a large population of young people, a growing number of who are attending university and other higher education institutions.
A focused effort to expand workplace exposure for graduates, coupled with a shift to technical education and the teaching of maths and science, will enable South Africa to build a larger resource of skilled workers.
This focus on skills is vital to our ambitious investment drive.
We have just concluded the first 5-year phase of our investment drive, raising R1.5 trillion in commitments from firms across the economy. These range from automobiles to pharmaceuticals, mining, the digital economy, manufacturing, energy, transport logistics and many others.
We have now increased the target over the next five years to R2 trillion.
To appreciate the great opportunities in our economy, I invite you to the next South Africa Investment Conference to be held in March 2024.
The investment drive includes an expansion of special economic zones, the most recent of which was built around the Ford Motor Company’s plant in the capital city, Pretoria. Around ten large factories now produce components for the scaled-up Ford plant.
Infrastructure investment is a special focus, with increased investment in energy, transport, digital infrastructure and water.
The reform of our visa system is underway, with increased visa-free travel. The focus is now shifting to business visas and work permits, where we are prioritising senior executives and scarce skills, so that the short-term constraints in skill availability does not impede growth.
Finally, we are working on ways to expand the greening of our economy. This includes renewable energy generation, proposed green hydrogen pilot projects and the development of a roadmap for electric vehicle production.
Africa is ready for new investment and strong partnerships.
South Africa is well positioned as the continent’s industrial centre, with deep capital markets, the rule of law, protection of property rights and a dynamic and youthful population.
The significant presence of US companies operating in South Africa, including Ford, Coca-Cola, Pepsico, Procter & Gamble, Google, Amazon and Walmart, among many others, forms a base for increased investment.
I am pleased to hear that the US Africa Business Council and BUSA will be hosting the inaugural business and investment forum on the margins of the AGOA Forum scheduled to be held in South Africa in November 2023.
This platform will present our respective governments, private sectors and civil society with numerous opportunities to advance our trade and investment relations.
I look forward to our discussions and encourage your candid views.
I also look forward to welcoming all of the companies present here today to South Africa in November this year during the AGOA Forum. We will have a Made in Africa Expo and I hope I will see procurement heads and CEOs from all of the companies present here today, attending the Forum and Expo; and that we can generate more orders to companies operating in SA, as part of our efforts to industrialise.
I look forward to building and strengthening business relationships that will accelerate growth, enable commercial success and ensure prosperity for both our countries.
I thank you.