SA's Strategy for African Economic Development: Promoting Growth and Partnership

1. SA’s Strategy for Africa’s Economic DevolopmentMr Tshediso Matona Acting Director-General: Trade and Industry 24 August 2005

2. Contents 1. Rationale and context • Africa’s Developmental Challenges • Africa’s Development Opportunities • SA in Africa’s Economy • SA/dti Challenges in Africa’s Development • Guiding Principles in SA’s Africa Strategy • Areas of Engagement • Stakeholders • Conclusion • Questions?

3. Rationale & Context • Strategy seeks to establish framework and action-plan to guide interventions and engagements to promote economic development in Africa by SA government, private sector and other actors • Strategy affirms the NEPAD framework and seeks to define a Role and Agenda for SA in implementation of NEPAD

4. Development Challenges in Africa Challenges well-documented, esp. in NEPAD document: • Marginalisation from benefits globalization • Africa’s share of global trade and investment minuscule, at 2% respective. • Low levels of productive and institutional capacity, and underdeveloped physical infrastructure • Low intra-Africa trade (at 10% of total) and low regional integration • Dependence on commodities and on extra-Africa trade preferences for narrow export basket • Debt (limit on gains from trade • Political and macro-economic instability • Human capital challenges (brain-drain, Hiv/Aids & others

5. Africa’s Development Opportunities • Africa well-endowed with natural resources that are unexploited, and human capital reservoir • There’s increasing stability, economic reform, and serious attempts to promote conducive climate for investment and growth • There’s active recruitment of SA investment and other FDI

6. SA’s Position in the African Economy • SA accounts for a third of Africa’s GPD & is among the 3 leading sources of FDI on continent • SA’s economic links in Africa growing, & SA’s growth & dev. drives Africa’s growth & dev. (see recent IMF study) • Africa increasingly key in SA’s GDP growth, esp. manufactures (and in future key to advance of BEE) • 16% of South Africa’s exports destined for Africa in 2003 • Full potential of links with continent yet to be fully tapped • Huge trade imbalance in SA’s favour & unsustainable • SA’s contribution to economic dev. in the region & Africa is a strategic imperative • SA needs to proactively reposition itself in Africa as long-term economic partner for mutually beneficial co-op and sustainable development • Development perspective & impact must inform criteria for interventions/engagements in Africa, & projects supported

7. Challenges facing SA &the dti External • Legacy of apartheid past (‘Big Bro Syndrome’ & trust problem) • Afro-pessimism globally • Low institutional capacity a barrier to cooperation • Trade barriers • Political & Economic instability & Risk • Competition from major powers (EU, US, China, etc) Internal • No institutional history & culture of cooperation with Africa • Afro-pessimism & xenophobia • ‘Short-term-ism’ in approach to business • Constraints in capacity & in coordination in govt. & with private sector • Need to adopt Africa-centric instruments & measures to support economic dev. on continent • Need to bring SACU along; & SADC

8. Guiding Principles for SA’s Africa Strategy • Asymmetry: SA to lead & make bigger concessions in trade & economic dealings with African partners • Africa’s challenges intertwined & SA’s strategy must be multi-pronged, promoting both trade & supply-capacity, & conducive investment climate & infrastructure • Strategy must located within NEPAD framework & emphasise partnerships

9. Areas of Engagement • Regional Integration:key pillar of economic dev. & platform for cooperation with continent (strengthen SACU; consolidate SADC) • Market Access/Intra-Africa Trade Strategy: • encouraging access of Africa products to SA market (& SACU) • adopt active import promotion policy & programme? • Need to consider Agoa-type preferential trade scheme? • Need to pursue targeted FTAs (eg, Nigeria, Egypt, Kenya) & export promotion • Outward Investment:Need to develop effective method to rehab. & dev. infrastructure & production (Spatial Dev. Initiatives) • Establish Institutional & Legal frameworksfor coop, trade & investment (BNCs/JMCs, MOUs, Investment Agreements, Tech coop) • Coordinate NEPAD Implementation – promote alignment of engagements/interactions in Africa with NEPAD goals • Multilateral Engagement (AU) – Participate & lead in AU trade & integration agenda • Forge Common African Approachto Global Economic Issues (e.g. WTO and Doha Round of trade negotiations)

10. What role can South Africa play in African economic development? • South African growth and economic development can have an even more profound impact in African development (Recent studies from the IMF indicate that South Africa’s growth has a positive effect on Africa’s growth) • Trade (direct and indirect effects-spillovers) – an increase in intra-Africa trade • Regional economic integration (SACU, SADC and other REC’s) • Business and consumer confidence • Market and product diversification • Strengthening of institutions and harmonisation of policies, standards and customs

11. Partners & Stakeholders • dti divisions (esp. EIDD, TISA, TEO, Marketing, CCRD) • Govt. Clusters (IRPS, E&E) • NEDLAC; Civil Society • Parliament • SACU and SADC • Private sector (Industry Assocs., Chambers, Export Councils) • NEPAD & AU Secretariats • Development agencies; UN & Bretton Woods Institutions