Gauteng MEC for Economic Development, Environment, Agriculture and Rural Development, Lebogang Maile’s Opening Remarks at the Bauma CONEXPO Africa, Johannesburg
Programme Director
Esteemed members of the business community Esteemed attendants from all around Africa and the world, Ladies and gentlemen
It gives me great honour this morning to welcome you all to the Gauteng Global City region, the powerhouse of the South African economy.
Indeed you have arrived in Gauteng, the industrial hub of Southern Africa, a province that contributes nearly 35% to our country’s GDP, 40% its total industrial output, 60% of exports and almost 10% to the GDP of the entire African continent.
The organisers deserve our praises for once again taking the decision to host this all-important event on African soil. This decision is a source of inspiration to us, as it not only communicates the message that the debut leg of this trade fair was a resounding success but it also confirms our belief that despite a range of challenges facing our economies, the world recognises that our continent has a lot to offer.
I hope that you find encouragement from some of the observations coming out of the Ernst & Young Africa Attractiveness Survey for 2015, which posits that Africa’s investment attractiveness has significantly improved in the past few years and that as an investment destination, we now rank second only to Asia.
We want to assure that this message carries even more weight and traction for both Johannesburg, a leading city in the continent and in Gauteng, which was singled out as the top investment destination in the entire African continent for the year 2015.
This goes to show that there is truly no better place to host an event of this economic significance and magnitude than the Gauteng City Region.
Distinguished guests,
The South African government holds dearly the notion that our development trajectory is intricately tied to the development and economic performance of our
sister countries on the continent. As Africans before anything else, we consider the fact that you have decided to host this significant Expo, which attracts a whole range of global players in the construction and mining space, as an unequivocal vote of confidence on Africa.
Programme Director,
Assuming centre stage in this Expo is the role of the construction and mining sectors in Africa and the world at large. We are pleased that you have elected to zoom-in on these sectors, particularly mining – a sector that occupies a special place in Africa’s history and currently remains a sizeable industry in the continent.
It is common knowledge that ours is a continent that is gifted with mineral wealth and strategic natural assets. Out of the 54 African sovereign states recorded by the UN, 46 have notable mineral deposits. Minerals are the continent’s second largest export category.
Furthermore, by value, more than 80% of the continent’s mineral commodities originate in five countries namely platinum-endowed South Africa, diamond-rich Botswana, and the gold producing nations of Ghana, Burkina Faso and Tanzania. The SADC region alone produces more than two thirds of Africa’s mineral exports by value.
It is also widely believed that even with the growth of consumer sectors, mining looks set to retain its weight in the continent’s economy, an argument supported by the African Development Bank’s forecast that natural resources will account for 30 billion US dollars per annum in government revenues by 2033.
Weaved together, these facts form a convincing narrative about the need to keep our eyes firmly on this industry, its challenges notwithstanding.
However, our epoch demands that we look beyond the statistics and spark deeper conversations about the strategic importance of our resources and how they can be utilised to develop our respective countries.
As you are aware, this is an age-old conversation, yet, the status quo in the mining industry, compels us to argue that the conversation is hardly worn-out.
The notion of utilising the mining industry to place Africa on an industrialisation path has caught fire across the continent and occupies the minds of most Africans today.
The bone of contention is not only how the proceeds directly benefit communities but how mining should be used to foster structural transformation and promote the development of an African industrial base.
Ladies and gentlemen,
Today Africans share a common view that the continent must transcend the economic situation in which mining activity only produces enclaves with little value retention and local economic benefits.
Today, most policy pundits and committed governments share a consensus that the creation of linkages, especially backward linkages, in the industry is a matter of urgency.
Collectively, our interest is to ensure that the industry generates productive employment, business opportunities for local entrepreneurs and more importantly, helps us to create a solid industrial base that can propel our countries to a higher levels of development.
Just a few days ago we celebrated the commencement of the construction of a Jewellery Manufacturing Precinct in this province – an initiative that will hopefully provide answers to some of these urgent questions.
It is within this context that we consider industry gatherings such this one as strategic in pushing for greater economic and social benefits from the mining industry.
We therefore take this opportunity to remind you that you occupy a special place in our vision for the continent.
Your importance finds expression from the reality that with a few exceptions like South Africa, which has a significant cluster of firms in mining equipment and related specialist services, the link between the mining industry and the broader sectors of the African economy is relatively underdeveloped.
This leads to a situation where the mineral wealth of the continent leaves its shores as unfinished products which acquire value elsewhere. It is also well known that the linkages between mining and the industrial inputs utilised in the sector are negligent at best and non-existent at worst.
This is a development trajectory that warrants change and the African Union vision 2063, along with our National Development Plan and more specifically the Industrial Policy Action Plan share common commitment to overhaul this situation.
Ladies and gentlemen, this Expo gives all of you as industry players an opportunity to give sincere thought to how you can aid African countries to
maximize the local economic development opportunities presented by the industry, including attracting investments in the local manufacturing of supply inputs for the extractive industry, in particular some of the specialised machinery and equipment that is on display for the course of this trade fair.
We take your presence here in such impressive numbers as a pledge not only of hope but as a commitment to see to it that Africa overcomes its underdeveloped trap and launches a new paradigm of growth and development.
The symbolic pledge you are making towards the continent with your presence is equally required in the construction sector – a sector that carries as many prospects as it does challenges.
We have every reason to believe that the construction industry is fast proving itself to be Africa’s treasure trove. According to KPMG’s Construction Survey Africa, investments in real estate now account for 43,8% of capital investments and generate 33,6% of FDI jobs in the continent.
Africa also ranks high as an investment destination for construction companies, with nearly half of the 165 global leaders in construction and engineering industries surveyed in 2013, indicating the desire to venture into the continent.
This investment affinity towards the continent is strongest amongst smaller companies with a turnover of less than 5 billion US dollars – meaning that small companies, especially those located in Europe and the Middle East, see a dynamic link between their growth prospects and Africa’s future.
With a growing middle class that is estimated to increase to 107 million by 2030 and increasing emphasis on addressing the ‘infrastructure deficit’, it is clear that Africa’s attractiveness for the global construction industry investment will experience massive growth.
There is also growing public sector investment in the infrastructure. One only has to look at the very country I represent, which is investing R1,4 trillion into infrastructure projects, to gauge the accuracy of this statement.
What is more encouraging is that unlike previously; growth in the construction sector is no longer just a by-product of mining activity as we witness investments in mega projects in energy, ICT, rail, hospitality and transport infrastructure. This is good news for Africa’s industrialisation agenda, economic diversification and the structural transformation we want to see.
However, we must hasten to say that even here there is plenty of room for improvement. One of our key concerns is that the industry is far too monopolistic.
Local players have a marginal stake in the value chains of the industry.
Here too questions about using the sector to build Africa’s industrial base along with building local skills and capacity assume prime focus.
In partnership with the private sector, African governments are seized with the responsibility to take bold steps that will directly induce structural transformation of our economies by:
- Promoting linkages between Africa’s dominant industries like mining in order to build a manufacturing base for the continent
- Creating regional linkages and value chains – a development that will not only create jobs and increase incomes but also consolidate the regional market for locally produced goods, give impetus to the development of regional economic infrastructure and consequently boost intra-Africa trade
A combination of these factors will make the continent less vulnerable to the whims of global economic markets. In a nutshell, this reflects our thinking about the two important sectors that are on the pedestal in this gathering.
Thank you for affording us the opportunity to share some of the key elements of our common vision to strengthen our economies and engender the African industrial revolution that we want to witness in this lifetime.
