Your excellencies from the diplomatic missions,
Our SAIC Partners and sponsors
Members of the diplomatic corps & all media present
Shall I say all protocols observed
There is a scarcity of good news to cheer us through this challenging period. Just when we thought that we had finally navigated a rough economy exacerbated by a devastating pandemic, we are now caught up in a troubling geopolitical tension which in all turns and purpose has the potential to disrupt the economic recovery.
However, what we are experiencing is just a reminder of what we face ahead of us even while a global economic recovery is underway. The question then is? Does the future carry a dark foreboding? As an economic envoy designated by the President to help mobilise investment to this country and, by implication, the rest of Africa, I’m tempted to dismiss pessimists. But let me also add that I’m a realist.
On the upside, my more than two decades of public service have taught me something significant. Every crisis that we have encountered has brought with it great opportunities. And opportunities in our economy are real and not perceived. The various infrastructure development projects such as the construction of bulk water infrastructure, construction of new road networks, energy capacity expansion plans, improvement of our port infrastructure, among others, present great opportunities for sustainable and inclusive growth.
These opportunities also provide an excellent opportunity for our country to create a new crop of Black Industrialists, women including youth entrepreneurs who for long were consigned to the periphery of productive sectors of the economy. In addition, the unfolding auction of the spectrum, which is now closer to reality, will usher in new technology and competitive pricing regime in SA’s telecoms landscape.
That said, our government knows that our country can’t prosper or grow its economy in isolation – it is simply not possible. Our manufactured goods need to find a market beyond our borders. Vice versa, goods manufactured in other parts of the continent should easily find a market in SA. Let me emphasise that goods manufactured in Zambia, Mozambique, Ghana, or Kenya should be on our shelves, in Shoprite, Pick n Pay Spar, you name them.
At present, intra-African trade is very low, at around 15%, relative to other regions elsewhere in the world, such as Europe 67%; Asia 61%; and America 47%. By creating an enlarged regional market, AfCTA offers long-term economic benefits by:
– catalysing greater development of cross-border infrastructure;
– incentivising economic diversification; and
– boosting institutional quality.
South Africa joined the Africa free Continental Trade Area (AfCTA) for these reasons and benefits for a better Africa. Africa offers investors access to a market of more than one billion people with a gross domestic product that exceeds $2.6 trillion. Through AfCTA, we intend to bring down these trade barriers to conduct economic activities seamlessly across the continent.
During the review period 2001-2020, we witnessed a consistent increase in intra-Africa trade, which peaked at 21% in 2015 and averaging 18% annually since 2019. However, the latest available data reveals that in 2020, intra-Africa trade dropped from USD 84 billion to USD 60 billion – a situation mainly attributable to disruptions in supply chains caused by the Covid-19 pandemic.
Our colleagues in the European Union grew their economies on the back of intra-trade. As such, we need to remedy this reversal of fortunes. We can only ignore the potential of the African market at our peril. To give context, Products with high intra-Africa trade include plastics, chemical products, machinery, agro, ships, and boats.
And Top performers amongst importers include Uganda, Tanzania, Nigeria, Kenya, and Zimbabwe, whose economies have exhibited growth in intra-Africa imports over the five-year review period 2016 – 2020. And top importers account for 56% of total intra-Africa imports. Shouldn’t we be looking to boost intra-Africa imports?
In other words, why should a hight net worthy individual based in East Africa be searching for a luxury boat in the European market when they can drive to Capetown and shop for one at a reasonable price? Vice versa, South Africa shouldn’t import grapes and citrus fruits from Italy when similar products can be sourced from Egypt.
Should we be letting high-net-worth Africans purchase luxury boats in German or other European countries when Capetown based manufacturers offer advanced luxury boats for far less than the price one would pay if they opted to purchase such a product in South Africa? Shouldn’t we be buying crude oil from Nigeria instead of importing this product elsewhere? For every product purchased outside the continent, we must remember that we are exporting jobs.
Ladies and gentlemen, I could go and list several advantages of intra-trade, but this won’t change our fortunes if we do not act today. There isn’t a better time for Africa than now to boost intra-trade and create employment opportunities. At the South African Investment Conference, we advocate for the accelerated adoption of AfCTA and its ideals.
In conclusion, it’s time for business, especially our home-grown conglomerates, to forge sustained partnerships and help boost economic and industrial growth. Thank you for taking time out of your busy schedules and joining us this morning.