S Van der Merwe: Western Cape Economic Development Agency (Wesgro)
African Business Networking Forum

24 August 2007

Chairperson
Honoured guests
Ladies and gentleman

C'est un grand plaisir pour moi d'etre ici aujourd hui avec vous.

Thank you very much indeed for inviting me to this important initiative of
Wesgro, the West African Business Networking Forum. Networking platforms
between government and business are an increasingly important vehicle through
which we can work together as business and government in realising our
respective and collective goals.

The establishment of such a forum provides us with the opportunity to foster
better business and political ties between South Africa and the rest of Africa,
and we should perhaps reflect on the synergies between our foreign policy
agenda and business interests beyond our borders.

South Africa's foreign policy is premised on our domestic policy and the two
are mutually reinforcing. It is important to remember that our engagements
beyond or borders must in the first instance reinforce the vision we have for
our own people of a better life. Our foreign policy is therefore guided by this
vision of "A better South Africa, A better Africa in a better world".

The modern world is characterised in many ways by the politics of expediency
and pragmatism over the need for collaborative partnerships to deal with common
challenges in an increasingly complex and interdependent world.

The theme for this session therefore is appropriate, not simply because it
reinforces our foreign policy agenda but covers nations in what could be
regarded as two of Africa's most crucial regional economic communities, the
Economic Community for West African States (ECOWAS) and the Southern African
Development Community (SADC). These regional economic communities in the south
and the west of our country include countries that are geographically located
along the Atlantic coast of Africa stretching from South Africa and Namibia in
the south, through Angola; the Democratic Republic of Congo; Nigeria; Ghana;
Cote d'Ivoire and as far a Senegal in the western bulge of the continent.

The regions are rich in resources, in diamonds and gold, in platinum and
oil. These are indeed riches which should translate into the prosperity of the
peoples of our regions. However, these countries are also characterised by
harsh conditions, desert and jungles, beauty and danger.

Sadly these abundant resources and this beauty has been the sources of much
conflict and turmoil in our respective regions and it is this that our
generation must address to enable our continent to emerge out of its dark
recent past and into a prosperous and enlightened future, where we can all
flourish.

Our foreign policy agenda is course far broader than just these two regional
economic communities (RECs), it is important to remember that RECs are
important building blocks for the continental political and economic
integration. But for the purpose of these discussions here today, and
considering the speakers who will address you here today, I will locate my
address within the context of business networking for the enhancement of
greater trade and investment along the Atlantic Coast of West and Southern
Africa as part of the process towards further integration on our continent.

Ladies and gentlemen, our government has consciously developed our foreign
policy to place human development at the heart of our international relations.
This is the belief that human development is the key factor in advancing our
continents rebirth and therefore in advancing our own national interests. To
develop and to harness the human potential of our people is to set us on the
right path towards the rebirth of our continent and the prosperity of her
peoples. Part of this development process is the creations of opportunities for
growing our respective economies.

We, in South Africa have therefore adopted the developmental state approach
towards realising this objective. This entails, amongst others, progressive
interventions by government and the creation of a conducive environment wherein
civil society generally and the private sector in particular can play a
meaningful role in contributing to the development of our people. The
developmental state's approach also entails the promotion of public-private
partnerships in an effort to eradicate unemployment and poverty.

The South African business community on the whole has responded positively
to government in this regard, and has generally been supportive of government
endeavours. These positive responses and goodwill are the basis of a dynamic
and enduring partnership between government and business for the achievement of
our goals and in the implementation of our foreign policy agenda.

We in the Department of Foreign Affairs execute our foreign policy mindful
of the fact that we operate in a world characterised by ever-increasing
globalisation. In a 2005 report on the Social Dimension of Globalisation, the
International Labour Organisation observed that:

Globalisation has set in motion a process of far reaching change that is
affecting everyone. New technology, supported by more open policies, has
created a world more interconnected than ever before. This spans not only
growing interdependence in economic relations; trade, investment, finance and
the organisation of production globally, but also social and political
interaction among organisations and individuals across the world.

The potential for good is immense. The growing interconnectivity among
people across the world is nurturing the realisation that we are all part of a
global community. This nascent sense of interdependence, commitment to shared
values, and solidarity among peoples across the world can be channelled to
build enlightened and democratic global governance in the interest of all. The
global market economy has demonstrated great productive capacity. Wisely
managed, it can deliver unprecedented material progress, generate more
productive and better jobs for all, and contribute significantly to reducing
world poverty.

We must realise of course that with the positive also come the negative.
This is particularly so for a country like ours that faces huge developmental
challenges. We also operate within a continent that not only faces
developmental challenges but also faces the real threat of further
marginalisation as a global player due, in part, to a prevailing sense of
Afro-pessimism. It was out of this recognition that African governments, on
behalf of their peoples embarked on the processes of establishing the African
Union (AU) and its developmental vehicle New Partnership on Africa's
Development (Nepad) to ensure that they take the development of the continent
into their own hands and thus create a better life for all.

But we recognise that the success of our country is linked inextricably to
peace, stability and prosperity on our continent. The interests of the African
continent are central to our foreign policy. Our national interest can best be
realised by working through and working with the rest of the African continent
within present globalisation processes taking place.

The renaissance of the continent will entail the adoption and implementation
of policies and programmes that will create the environment for the development
of competitive fast growing economies which create sufficient jobs for all
jobseekers; with a redistribution of income and opportunities in favour of the
poor; a society capable of ensuring that sound health, education and other
services are available to all; and an environment in which homes are safe and
places of work are productive.

Ladies and gentlemen, there are therefore distinct roles for government and
business in achieving our national objective. A look at Wesgro's vision and
mission reveals that there are synergies in our approach to realising these
objectives and therefore much room for collaboration. You vision to make Cape
Town and the Western Cape the most competitive business destination in the
world by 2014 is ambitious. But the acclaimed author Daniel Hudson Burnham once
wrote:

Make no small plans; they have no magic to stir our blood and probably
themselves will not be realised. Make big plans; aim high in hope and work,
remembering that a noble, logical diagram, once recorded will not die, but long
after we are gone be a living thing, asserting itself with ever growing
insistence.

The Accelerated Shared Growth Initiative for South Africa (AsgiSA) is a
strategy by government to fast track certain key prioritised growth initiatives
aimed at growing the economy faster, creating more jobs and alleviating
poverty.

The overall thrust of AsgiSA has resonance with your own mission to:

* attract and retain direct investment, grow exports and globally marketing
the business image of the Western Cape
* live the aspirations and spirit of the new South Africa
* contribute to the growth and development of Africa through �commitment to
Nepad
* drive shared growth and strategic alignment as priority approaches to
development
* benchmark yourselves against global best practice.

We have said our domestic interest drives our foreign policy and work on the
continent. Let us reflect a bit on these local imperatives that will be the
basis of our engagement on the African continent.

The Western Cape province has many strategic and geographic advantages: the
first is the connectivity to the rest of the country through road and rail
infrastructure and connectivity to three inland provinces, making access to
domestic spatial development initiatives possible in order to harness the
maximum potential for its economic growth; another is that the Cape has the
opportunity to develop a relatively untapped maritime sector to further enhance
its economic potential for growth and development, and related to these two is
the initiative to link West Africa to through the Trade and Investment Corridor
with the Western Cape.

I believe this is an important and progressive initiative and should be
pursued. Not only is this positive business proposition but it is important in
the context of historical and current debates on the integration of our
continent to ensure the political, social and economic renewal of our
continent. We are locked in many ways in a common destiny guided by our shared
vision to reconstruct our continent by its own resources and own energy.
As government, we seek to create conducive conditions for both outward and
inbound investments. We also seek to create the opportunities for growing
mutual trade by working with others to contribute to a stable Africa and
markets through bilateral and multilateral relations.

We have said that global challenges have grown in complexity and no country
of the world can afford to adopt an isolationist approach. Amongst other
things, this means that we need to rely on other government departments and
indeed other non state players, whose mandates increasingly transcend our
borders in the search for solutions to challenges that we face as states in
today's world. We could for example consider departments that deal with issues
of health, water and security issues amongst others. There is therefore great
scope for increasing co-operation between state and non-state institutions in
achieving our commonly shared objectives.

I have no doubt that the decision to encourage and develop business links
with other countries on the African continent is based on sound business sense
rather than the altruistic principle that this is simply the right thing to do!
But there is a growing realisation, not only within our own country but also
globally, of the immense potential that exists on the continent. One only needs
to look at the interest that has been demonstrated in recent years by important
countries such as the United States of America and the Peoples Republic of
China in search of military bases and natural resources respectively. This
presents us in the continent with immense opportunity and challenges, and, if
we make the right choices, bargaining power to make deals that suit us both
from political and business stand-points.

If our presence and reach on the continent, through peacekeeping missions,
disaster relief, bilateral political and economic relations, multilateral
co-operation through SADC, the AU and Nepad ultimately has the desired effect,
then we are on the correct path towards ensuring that both as a country and as
part of the continent we are poised to face these challenges as well seize the
opportunities presented to us.

Ladies and Gentleman, as you are aware, President Mbeki and several cabinet
ministers recently returned attended the African Union Summit in Ghana which
debated the issue of continental Union Government aimed at uniting our
continent and ultimately creating the conditions for peace and prosperity. A
key outcome of the Summit was the centrality of Regional Economic Communities,
to which I referred earlier, in the pursuit of sustainable economic growth and
development.

Amongst the key developments that took place on the margins of the Summit,
was the launch of the Pan-African Infrastructure Development Fund (PAIDF). This
should be of much interest to you as members of Wesgro as there real
opportunities to be leveraged which also coincide with your vision and mission.
The Fund estimates that over the next ten years, at least US$150 billion of
infrastructure investment opportunities are expected to be created due to
infrastructure demands in energy, water and sanitation, transport and
communication technology. The contributions to the fund currently stand at US
$625 million, which originates exclusively from within our continent.

The Fund represents investment opportunities structured in the following
way:

* a range of investment instruments to help diversify African pension fund
portfolios
* competitive instruments based on public-private infrastructure investments to
increase total portfolio risk-adjusted returns
* a long-term investment horizon with flexibility to match pension fund
liabilities
* the mitigation of risk at key levels
* an opportunity to participate in an initiative for Africa's reconstruction
that will help to put in place the drivers for Africa's future growth.

I would also like to draw your attention to the Economic Report on Africa
2007 titled "Accelerating Africa's Development through Diversification." The
report argues that growth in Africa has increased but it is still not enough.
According to the report, overall real Gross Domestic Product (GDP) growth of
5,7 percent was achieved for 2006 compared to 5,3 percent in 2005. As many as
twenty eight countries recorded improvements in growth in 2006. Improvement in
macroeconomic management in many countries, and strong global demand for key
African export commodities underpinned this growth. Regrettably, there was a
deceleration of growth in West Africa and Southern Africa, which without a
doubt poses a challenge for Wesgro and would in all probability, be a major
source of debate here today.

West Africa experienced the greatest decline in GDP growth in 2006 due
mainly to a decline in growth in Nigeria from (6,0 percent in 2005 to 4,2
percent in 2006) and this it is believed as a result of social unrest in the
Niger Delta. For the purposes of discussion here today, I would briefly like to
reflect on two case studies that will be the subject of discussion during the
course of today's networking session.

The first relates to Nigeria as a major economic player in our relations
with West Africa.

Nigeria is widely regarded as the economic driving force within the West
African community of nations. The country is largely dependent on oil and gas
reserves for revenue generation and exports. However, the country has embarked
on liberalising its economy to reduce the strong role played by the state and
to push private sector-led growth.

Most of South Africa's trade with and investment in Nigeria took place after
the 1994 democratic elections. South Africa's engagement with Nigeria had a
positive effect on some sectors of that economy, notably in telecommunications.
South Africa is still a relatively small player in the Nigerian economy overall
competing with the United States, Britain and now new entrants China and
India.

South Africa has identified several sectors of the Nigerian economy of which
both the South African private sector and state-owned enterprises (SOE) can be
involved in such as minerals and energy, agriculture, agricultural training,
technology and knowledge transfers in agriculture, co-operation in biological
sciences such as veterinary services and genetics, infrastructure development
such as power generation and transport and finally the arms industry.

The involvement of South African companies in the Nigerian economy has not
gone without its challenges. There is a perception in some quarters that South
African businesses have replaced the former colonial business community and is
now behaving in similar fashion to the old dominant colonial business
community. We need to dispel these negative perceptions.

Without a doubt, Nigeria remains an important political partner for the
South African government in advancing our vision of a better life for all as
well as creating business opportunities for our private sector. However, there
are challenges that need to be dealt with and this can only be done effectively
through building genuine and enduring partnerships. As Duncan Mbonyana from
Eskom Enterprises correctly observed:

Business on the continent is a relationship, not just a transaction. If you
miss the relationship you will have endless trouble with the transaction.

As with governments, the business community needs to spend much time and
energy on building relationships on the continent. Building a relationship is
of course not an event; it is a process and takes time. These are the inherent
challenges and risks that come with doing business anywhere and I hope that
during your discussion session on this issue, you will reflect on how, through
the South Africa-Nigeria Business Forum, these risks can be minimised. For our
part as government we will continue to ensure that we protect South African
businesses through the conclusion of Bilateral Investment Protection and
Promotion Agreements (BIPPAs) and other bi-lateral agreements.

Regarding the Southern Africa region, it is important to note that growth
improved in 2006. With increased public spending and high Foreign Direct
Investment (FDI) flows, South Africa maintained the same growth rate of 2005
through 2006 although private consumption declined due to higher oil
prices.

Notwithstanding the slowdown in oil production, Angola remains the fastest
growing economy in Southern Africa (17,6 percent). The International Monetary
Fund (IMF) has expressed some concerns though that "the non-oil sector must be
more competitive if it is to become the source of sustained high real growth.
At present, the authorities seem to have focused on infrastructure investment
to facilitate the development of the non-oil sector. Carefully targeted
investment would help address supply-side bottlenecks. However, it is critical
that the cost of doing business is reduced, including the streamlining of
costly and time-consuming registration requirements. Strengthening the legal
and regulatory framework for business, contract enforcement, and property
rights would also be necessary to encourage business activity."

These are the two countries which will be the subject of your discussions a
little alter today and I am sure there will be a great deal of further
information on these countries. But I have tried here to reflect on some of
positive developments that have occurred in recent years, which are in stark
contract to the negative stereotypes about our continent. I have, however, done
so, whilst also highlighting the challenges that continue to face us with the
view to dealing and overcoming them.

Please allow me at this point to turn briefly to one of the most important
events in the history of our country, the 2010 Football World Cup tournament.
South Africans are increasingly focussing on the benefits that will accrue
beyond the event. More than seventy percent of our nation believes this major
sporting event will impact positively on the long term sustainable growth and
development of our economy.

With South Africa already being a destination of choice individual fans from
across the world will be attracted to the uniqueness of what South Africa has
to offer. The planned fan's parks will ensure more than a million people come
to South Africa despite limited tickets available for matches. The importance
of public viewing spaces and fan parks should therefore not be
underestimated.

Also, small businesses must benefit from the World Cup. The organising
committee has to ensure that South African businesses, in particular those from
previously disadvantaged communities enjoy advantage through the procurement
process.

Expenditure leading up to and including the 2010 includes a
telecommunications network; an information technology network; domestic
transport; tourism; safety and security; the staging of official events;
advertising and support events.

Transport will be a key to the success of the event. At the recent Southern
African Transport Conference the importance of airports was emphasised to
economic growth and development. Cape Town International airport is having its
central terminal building upgraded at a cost of R1 billion and a multi-storey
parking will cost another R394 million. The national Department of Transport
explained that projects would prioritise public transport and seek to satisfy
both long-term and event-specific mobility.

South African National Roads Agency Limited (Sanral), the company
responsible for development of the national roads network indicated that the
agency is involved in a number of projects to ensure adequate roads ahead of
2010 and beyond. These included road improvements and construction around the
host cities. Emphasis must be placed on partnerships to deliver adequate
transport for the delivery of a successful tournament.

A strong private sector is essential to Africa's upliftment. Political
stability and rising incomes are deterrents to conflict, and overall economic
growth is the only way to begin the eradication of poverty. The way forward is
in the development of partnerships, both with local companies and governments,
and for South Africa to provide leadership where it can.

Ladies and gentleman, government and the private sector have a heavy
responsibility of creating a better life for all our people. We must build on
political victory that was ushered by the decolonialisation process that began
in Ghana some fifty years ago by ensuring the total economic emancipation of
South Africa and the rest of Africa.

I am encouraged therefore by recent media report that Wesgro attracted R830
million in investment in the Western Cape in the financial year to 31 March
with 3 690 jobs created in the process.

These are encouraging signs and we need to further strengthen the ties
between our political and economic diplomacy. In this regard, we must use the
growing partnerships between government and the business community to better
understand the trade and investment environment in Africa and maximise on the
opportunities that comes with our involvement on the continent.

We also need to take a sober look at the challenges we will be faced with as
we endeavour to embark on the journey of furthering our business presence on
the continent and how we can respond to these in a manner that is consistent
with the vision of a united Africa.

Some of the challenges that we both face with include the low levels of
development and insufficient investment in people as resources, political and
fiscal risk, a weak private sector, high dependency on donors, high business
costs, insufficient air and road links, poor leadership and bad governance;
corruption, high cost of finance and currency fluctuations.

These should not deter us, but we should strive towards overcoming these
challenges with the full understanding that our vision is bigger than the
obstacles in our way. Our Deputy President yesterday hosted the leader of the
Indian Congress Party, Mrs Sonja Gandhi in Cape Town. She and her late husband,
her mother-in-law Mrs Indira Gandhi and Mahatma Gandhi are inspirational
leaders of their people and indeed in the world.

In her address to us yesterday the Deputy President quoted from Mahatma
Gandhi the following passage: He said: The seven blunders that human society
commits and cause all the violence: Wealth without work; Pleasure without
conscience, knowledge without character, commerce without morality, science
without humanity, worship without sacrifice, and politics without
principles.

I think we can all learn something from that. Je vous remerci beaucoup et je
vous souhaite beaucoup de success avec votre conference.

I wish you well in your deliberation and look forward to the report of the
outcomes of this networking session.

I thank you.

Issued by: Department of Foreign Affairs
24 August 2007
Source: Department of Foreign Affairs (http://www.dfa.gov.za)