Since it was introduced over two years ago, the Industrial Policy Action Plan (IPAP2) has stabilised the clothing sector, turned around the automotive sector, added jobs in the business process services sector and had introduced procurement designation to boost local production, Trade and Industry Minister Rob Davies says.

Presenting his Budget Vote in Parliament in Cape Town last week, Davies detailed progress made in the IPAP2 which was launched in February 2010 and which now falls under the New Growth Path.

Opposition members lauded the developments, but pointed out that the department still had a significant amount of work still to do in improving economic support, particularly when it came to boosting support to small businesses and improving export assistance.

Modest increase in employment

Davies said in spite of being introduced in 2009 during the global economic crisis, the Clothing and Textile Competitiveness Improvement Programme had not only stalled employment losses in 2010 but led to a modest increase in employment in 2011.

A total of R14.4-million disbursed to 106 companies, combined with the R310 million disbursed under the production incentive scheme, had supported 48 384 direct and indirect jobs, he said.

The Motor Industry Development Programme (MIDP) had supported investment commitments of over R15-billion investment commitments from both assemblers and component suppliers.

Over 500 jobs were added in the sector in the last quarter, and Davies said a further set of approved projects would create about 11 000 jobs over the next three years.

The transition from the MIDP to the Automotive Production and Development Programme (APDP) by 2013 had largely been completed, he said, adding that this had helped give policy certainty even amid global economic stagnation.

Raising competitiveness

He said the department had borrowed on the lessons of the clothing and textile production incentive, in launching the Manufacturing Competitiveness Enhancement Programme (MCEP).

The department, Davies said, had learnt that the way forward for manufacturing was to invest and raise competitiveness and not wait in the hope that the global environment would improve.

The MCEP, which was launched last week and would supplement the 12i tax incentive, would be deployed towards upgrading the competitiveness of relatively labour-intensive and value-adding manufacturing sectors negatively impacted by the value of the rand, the global economic crisis and necessary increases in the cost of electricity.

The department, through the Small Enterprise Development Agency (Seda), would improve entrepreneurial capacity by rolling out more business incubators in partnership with incubator organisations.

He said incubators, through Seda's incubator programme, had last year by the end of December 2011 created 189 new small enterprises and 931 jobs.

The government is also acting to speed up payments to small businesses.

While Seda had set up an SMME hotline in 2009, the National Treasury had recently issued practice notes to all national and provincial departments including state-owned enterprises to pay businesses within 30 days on receipt of invoice in accordance with Treasury regulations

.

This would address cash flow challenges faced by these enterprises, he said.

Boosting internal capacity

Davies said the department was boosting its internal capacity to focus more on the informal, townships and peri-urban enterprises and would also be developing a informal sector strategy, including the micro finance programme.

He said the Cooperatives Amendment Bill has been submitted for certification to the State Law Advisors and was due for submission to Cabinet for approval.

The department had assisted in supporting 220 small scale co-operatives to set up and had trained 175 co-operatives and provided 115 with market access covering both local and international markets during the past year.

"In an effort to increase market access for co-operatives, through the Brics mechanism, South Africa and China have agreed to enter into business contracts - "cooperatives to cooperatives" - on the following three commodities: maize, wine and aquaculture," he said.

Davies said the introduction of the New Companies Act had also changed the manner in which business is undertaken in South Africa and as a result, South Africa has improved significantly in the Africa Competitiveness Report's index for ease of starting a business.

Davies said with demand and growth in Western developed countries likely to remain constrained in the foreseeable future, South Africa would focus on the Brics countries, high growth markets in Africa, Middle East, Asia and other emerging economies such as Turkey, Indonesia, Chile, Vietnam and Thailand.

However, he added that the department would structure South Africa's economic relations with countries of the South in ways that foster complementarily and mutual benefit, while avoiding destructive competition.

Source: BuaNews

South Africa is not only an important emerging economy in its own right - it is also a key gateway to sub-Saharan Africa.

South Africa outperformed the rest of Africa, as well as its upper middle-income economy peers, in a World Bank survey of trade efficiency, improving its previous performance despite a general slowdown in trade logistics performance in the wake of the global recession.

According to the World Bank's "Connecting to Compete 2012" report, released on Tuesday, countries that pursued aggressive reforms continued to improve their trade logistics performance, despite the global slowdown in progress over the last two years.

South Africa was among a group of countries - including Chile, China, India, Morocco, Turkey and the US - that improved their previous performance, according to the study, which is based on a comprehensive world survey of international freight forwarders and express carriers.

Top performer in Africa, BRICS

In the upper-middle income country category, South Africa was the top performer, followed by China and Turkey. South Africa's logistics performance indicators gave the country a score of 3.67, lifting it up to 23rd place overall out of 155 economies surveyed - up from a ranking of 28 in 2010.

China, ranked 26th, followed closest among South Africa's BRICS partners, followed by Brazil at 45th, India at 46th, and Russia at 95th.

Tunisia was the next best African performer, ranked 41st, followed by Morocco (50th), Egypt (57th), Benin (67th) and Botswana (68th). Economic powerhouse Nigeria placed 121st.

"Infrastructure stands out as the chief driver of progress in top performers, followed by improvements in logistics services, and customs and border management," Mona Haddad, sector manager of the World Bank's international trade department, said in a statement.

"All top performers show strong cooperation between the public and private sectors, and a comprehensive approach in the development of services, infrastructure and efficient logistics."

Role in reducing food prices, carbon footprint

At a time where food prices are at historic highs, the survey found that logistics is important for food security.

"Transport and logistics directly affect the price and local availability of food through the performance and resilience of food chains, especially in African and Middle Eastern countries that depend heavily on food imports," the World Bank said.

In developing countries, particularly landlocked and poor ones, transport and logistics account for 20-60 percent of delivered food prices, according to the survey. "For instance, they make up 48 percent of the cost of US corn imported by Nicaragua."

The survey, which for the first time included environmental indicators, also found that green logistics is quickly gaining prominence in high-income and emerging economies - "a positive development, since logistics and freight-related activities may account for up to 15 percent of human carbon dioxide emissions".

"Trade logistics is key to economic competitiveness, growth, and poverty reduction," said Otaviano Canuto, World Bank vice-president for poverty reduction and economic management.

"Unfortunately, the logistics gap between rich and poor countries continues, and the convergence trend experienced between 2007 and 2010 has stalled as events like the global recession and the European debt crisis shifted attention away from logistics reform."

According to the World Bank, the way forward is clearly demonstrated by the top performers in the 2012 survey: "Only by fostering cooperation between the public and private sectors, and by considering the impact of all agencies on the supply chain, can a country create sustainable improvements in its logistical capabilities."

SAinfo reporter

First-world infrastructure plus a vibrant emerging market equals huge investment potential!

For the country to overcome inequality, South Africans must reach consensus on both workers' wages and executive pay rates, and speeding up the creation of new jobs, says Economic Development Minister Ebrahim Patel.

Speaking at the Next Economy National Dialogue on income inequality in Parliament, Cape Town on Thursday, Patel singled out figures in the 2010 household survey that revealed that the top 10% of earners in South Africa took home salaries that were 101 times higher than the bottom 10% of earners.

"When what one person takes away is so disproportionally larger than what another takes away, the social glue that holds society together weakens," he said, adding that income inequality also suppressed the market, as fewer people were able to buy goods and services.

Effective partnerships needed

What was needed were more effective partnerships between all sections of society.

"If partnership can do what it did to the Japanese economy after the end of the Second World War, or the German economy, or to a number of other successful economies, partnership needs a sense of being in something together," Patel said.

He highlighted the progress that Brazil had made in overcoming inequality since the mid-1990s, even though, between 2000 and 2008, Brazil and South Africa had grown at nearly the same rate - Brazil at 3.5%, South Africa at 3.6%.

The government was addressing inequality largely through social grants, the country's regressive tax system, and free or subsidised basic services.

New job opportunities key

However, this wasn't enough, Patel said, adding that the government alone would never be able to overcome inequality in South Africa.

"We have got to build, to a greater and greater extent, opportunities for employment, for jobs, for decent work, as the principle means out of poverty."

While over 300 000 new jobs had been added over the last 12 months, just over 400 000 new jobs had been added since the adoption of the New Growth Path 18 months ago - compared to the previous 18 months preceding the adoption of the new policy, when the country lost over 600 000 jobs.

"But not withstanding that jobs growth, we are hardly making a dent in jobs growth, we are hardly making a dent in unemployment levels," Patel said.

CEOs must disclose pay packages: Vavi

Also addressing the debate in Parliament, Congress of South African Trade Unions (Cosatu) secretary-general Zwelinzima Vavi said that at a youth wage subsidy - an idea first mooted by the National Treasury - would only address unemployment in the short term.

Vavi acknowledged that unemployment was the biggest problem the country faced, but said that at the same time, one couldn't look away from the issue of high pay, adding that the country needed a mechanism to get chief executives to disclose the level of their pay packages.

He agreed with the 2011 report and findings of the UK High Pay Commission, that shareholders should be given more power to vote on the pay packages and bonuses of top executives.

He said top South African executives wanted to measure their packages with those of other developed countries, while at the same time arguing that workers had to be paid on par with other developing countries.

Vavi pointed out that top executives in South Africa earned 1 728 times the average worker in their respective companies, while this gap was only at 319 times in the US.

Business sector 'unfairly demonised'

Bobby Godsell, chairman of Business Leadership South Africa, who backed the idea of setting up a commission to examine corporate pay as the UK had done, said the business sector was often unfairly demonised.

Business owners and business leaders were not only after money when running a company, but also wanted to build good companies and make a contribution to society.

Top executives had to be remunerated accordingly, he said.

In response to Vavi's assertion that inequality was increasingly dividing the country along class lines, Nazmeera Moola, head of macro-strategy at Macquarie First South, stressed that the country needed to create more jobs, no matter the scale of remuneration.

"There is class warfare, and the warfare is between those who have formal sector jobs and those that don't," Moola said.

What would relieve unemployment and narrow the gap between the rich and poor, she said, was if the country helped smaller firms to hire more workers.

UK High Pay Commission chairperson joins debate

Joining the debate in Cape Town on Thursday, Deborah Hargreaves, chairperson of the UK High Pay Commission, said the commission had developed a 12-point plan which had subsequently been adopted by the Labour party.

Hargreaves said the plan included a call to give shareholders a binding vote on chief executives' pay or exist bonuses.

She said the UK government was currently drafting regulations around executive pay which included making allowances for more diversity on companies' remuneration committees, and the calculation of a single figure around which executive pay could be structured.

However, she said the UK government had not turned down a more controversial idea to have employee representative on remuneration committees.

She said massive distortions in pay destabilised economic growth as it drew many of the brightest minds to the financial sector, away from the industrial sector. It also demoralised those in the workforce who felt that pay rates were unfair.

There was also evidence that more equal societies attracted more entrepreneurship.

She said the top 0.1% of income earners in the UK (earning more than £500 000 and consisting of 36 000 people) saw their pay rise by 64% between 1997 and 2008, while the income of middle-income earners rose only by seven percent over the same period.

In a recent British survey that asked how much top executives should be paid, most people polled said top executives should be paid between £500 000 and £700 000 pounds - a massive contrast to the average top pay of £4.2-million, she said.

Source: BuaNews

It is time to move past diagnosis of why African countries do not trade with each other nearly as much as they should, World Trade Organization director-general Pascal Lamy told participants at the World Economic Forum on Africa in Addis Ababa, Ethiopia on Thursday.

The issue was not about diagnosis of what needed to be done, but on how to do it, Lamy said a conference session on intra-African trade.

"We know that the necessary initiatives have to happen at the regional level. Regional organizations have to address these problems one by one. The key to removing these bottlenecks lies in the political energy of regional leaders to do it."

Obstacles to intra-African trade, delegates were told, include inadequate or non-existent infrastructure, complex bureaucratic procedures, inefficient border administrations, regulatory discrepancies that hamper trade and economies of scale - and, more recently, the tightening up of trade finance.

"Trade finance is the oil of trade, and there is a potential problem given new financial regulations that have been developed worldwide since the [2008-09 global] financial crisis," Lamy said.

Regulatory environment 'must be harmonized'

Africa's trade landscape is characterized by a patchwork of trade rules and regulations that make cross-border trade cumbersome and, at times, impossible, delegates heard. The regulatory environment across the continent would have to be harmonized before Africa could realize its potential as a global trade powerhouse.

If national governments could get their priorities clear on this, Lamy said, they would find there was plenty of funding available to help them achieve it.

"African countries and regions need to set up a list of priorities of what needs to be done, and do it. It is not a problem of resources - we have the resources. The Aid for Trade lesson is that once countries have their priorities clear, money is not a problem."

African companies would not become global players until they captured regional markets, warned Jaidev Shroff, chief executive of United Phosphorus of India.

"There is a lot of talk about Africa becoming a global supplier of food, energy, minerals, etc," Shroff said. "But until governments make the business environment more competitive, it is going to be very difficult to achieve."

Increasing, diversifying productive capacity

For Ethiopian Industry Minister Mekonnen Manyazewal, infrastructure and the capacity to manage and facilitate trade was "a basic", but the need to reduce costs and diversify countries' economic base was also paramount.

"The issue of increasing our productive capacity and diversifying our products are key for trading," Manyazewal said. African countries also needed to diversify their economic bases, he said.

"It is time to look for quick wins by analysing the value chains from production to the markets and find the constraints that can be overcome through better coordination, better administration and efficiency."

Manyazewal called on the private sector to invest in Africa's productive capacity, echoing calls by both Lamy and Jean-Louis Ekra, president of the African Export-Import Bank, for the private sector to mobilize and create "bottom-up pressure" on politicians to address the issues of trade openness and competitiveness.

Call for private sector to engage

"A few African entrepreneurs understand trade issues," said Ekra. "It is important that they build capacity on these issues so they can put pressure on the government to negotiate in their favour."

In the wake of the global financial crisis, many national banks are cautious, which is why one of the roles of the African Export-Import Bank was to allow banks to feel more secure about instrument issued by other banks, Ekra said. The private sector needed to engage in this issue.

"Once the African private sector talks to itself and speaks with one voice, there are grounds to improve and increase the level of transactions among them."

Mahmoud Eisa, Egypt's minister of industry and foreign trade, pointed out that Africa should have a target to increase its percentage of global trade from 4%, and should set a target for intra-African trade.

But trade without infrastructure "will always be an intention rather than an accomplishment", Eisa added. Transport and communications were critical, but so was infrastructure such as laboratories, regulation and trade policies.

Eisa pointed to the European Union, where trade regulations are harmonized, as a model. He also called for stronger standardization in the light of a "weak" African Regional Organization for Standardization.

Source: World Economic Forum

Open for business

First-world infrastructure plus a vibrant emerging market equals huge investment potential!

African agriculture is undergoing a transformation, creating a new era of opportunity for both farmers and investors, according to African and global leaders at the World Economic Forum on Africa.

The Grow Africa Investment Forum, convened jointly by the African Union, Nepad and the World Economic Forum (WEF), engaged over 270 leaders at the gathering in Addis Ababa, Ethiopia on Thursday.

These included heads of state and government from Ethiopia, Rwanda and Tanzania, as well as leaders of African and global business, international and donor agencies and farmer organizations.

Huge investment potential

Forum participants noted that African agriculture offers tremendous growth potential to investors, which in turn promised to strengthen food security and economic opportunity on the continent.

Greater private-sector investment and improvements to the business enabling environment were needed to capture this potential, delegates were told.

The leaders noted that much of the continent's agricultural potential remains untapped. "We have scratched the surface, but we haven't yet broken the mould," said Ethiopian Prime Minister Meles Zenawi. "When we do that, you will see the explosion of development in Africa."

During Thurday's session, seven countries showcased specific investment and partnership opportunities aligned to their national priorities for agricultural transformation.

'We are ready to do business'

"We are ready to do business; that's why we came to this meeting," said Tanzanian President Jakaya Kikwete, noting that Tanzania's agriculture investment strategy prioritized groups that could most benefit from new market opportunities.

"When we bring in the private sector, it is to benefit the smallholder farmers," Kikwete said. "We need to modernize agriculture and make it more attractive to youth."

President Kikwete added that governments had an important role to play in providing support in areas of irrigation, inputs and building commodity markets. However, private sector investment was also essential in order to avoid over-dependence on subsidies.

Rwandan President Paul Kagame said that African countries could "mobilize farmers into an entrepreneurial mindset and create new opportunities for women, youth and rural entrepreneurs."

'New ways of leveraging the agriculture sector'

The Grow Africa partnership has developed significant momentum since it was launched at the 2011 World Economic Forum on Africa in Cape Town, South Africa.

A total of 116 companies participated in the Grow Africa Investment Forum, including 49 African and 47 multinational companies, plus 20 from other regions such as Asia and the Middle East.

"Much of the investment in Africa can come from Africa if we provide the right financing mechanisms and policy environment," said African Export-Import Bank president Jean-Louis Ekra.

According to Unilever executive vice-president Frank Braeken, African leaders "are defining new ways to leverage the agriculture sector as a driver of inclusive and sustainable growth. This offers new agribusiness opportunities that are increasingly attractive to investors."

Empowering African farmers 'crucial'

Participants agreed that empowering African farmers would be central to the future of agriculture on the continent.

"Smallholder farmers are a sleeping giant in Africa," said Dyborn Chibonga, CEO of the National Smallholder Farmers' Association of Malawi. "That sleeping giant needs to be mobilized into collective action groups."

Ethiopian Prime Minister Meles Zenawi said the way to realize this was through increasing the productivity of small farmers and having them well organized and collaborative in order to take advantage of supply chains and investments

Ethiopia has achieved significant gains in agricultural productivity using this model in recent years, setting aside 16% of its national budget for agriculture - well above the 10% to which all African governments have committed themselves.

The Grow Africa partnership, coordinated by the African Union, Nepad and the WEF, aims to "galvanize sustainable investment into African agriculture based on country-led priorities," the WEF said on Thursday.

According to the WEF, Grow Africa builds upon the CAADP, which works to boost African agricultural productivity through sector development plans. Rwanda, Burkina Faso, Tanzania, Mozambique, Ghana, Kenya and Ethiopia are the first countries to engage with Grow Africa.

"The Grow Africa platform is open to all countries, and can accelerate the implementation of national investment plans developed through the Comprehensive African Agricultural Development Programme," said African Union chairperson Jean Ping.

The potential seen in African agriculture presents a transformational opportunity, according to WEF vice-chairman Josette Sheeran. "Working together, we can ensure that when we meet in 10 years, it will be in an Africa that is not only feeding itself, but helping to feed the world."

SAinfo reporter and World Economic Forum

Open for business

First-world infrastructure plus a vibrant emerging market equals huge investment potential!

International models on how to boost the development of the ICT sector in Africa will come under the spotlight during the inaugural ICT Indaba taking place at the Cape Town International Convention Centre from 4 to 7 June.

The event, organised by the Department of Communications and endorsed by the International Telecommunications Union, aims to formulate an African Agenda to promote ICT as a catalyst for social and economic development on the continent.

According to the department, hundreds of delegates from Africa, Europe, Asia, and South America, including ICT executives and government representatives, will take part in the 2012 ICT Indaba, while ICT regulators from more than 50 countries on the continent have also been invited.

One of the keynote speakers at the Indaba will be ITU deputy secretary-general Houlin Zhao, who will present a paper on the role of ICTs in socio-economic development.

Tech gurus peer into Africa's crystal ball

One of the highlights of the Indaba will be a "crystal ball exercise" in which eight international experts will discuss strategies for entrepreneurs and predict the future of technology in Africa and the world over the next 15-20 years.

The crystal ball "gurus" will include Dimension Data chairman Andile Ngcaba, Japan Science Agency director Shig Okaya, Global Innovation Summit (Silicon Valley) executive chairman Alfred Watkins, Intel Capital Africa director Sam Mensah, and Microsoft Middle East and Africa regional head Zaki Khoury.

Vijay Tharumartnam of Multi Development Corporation will speak on the Malaysian "Silicon Valley experience" during a session devoted to "developing smart cities in the African context", in which there will also be presentations on Bangalore, Indian's Silicon Valley, Mexico's Guadalajara, and Egypt.

Developing country models for skills development

Speakers from Rwanda, China, India, and Cuba will discuss developing country models for building and retaining the necessary skills base for a robust ICT industry. These will include Miche Bezy, associate director of Carnegie Mellon University in Rwanda, who will look at how Rwanda is producing a competitive ICT skills base.

Dr Jun Xia of the Beijing University of Posts and Telecommunications will discuss the Chinese model of advancing rural development through ICTs, the Indian model will look at conceptualising e-skills development programmes, while the Cuban model will share experiences on producing industry-ready graduates.

Other sessions will focus on broadband connnectivity and policies for advancing the knowledge-based economy in Africa, while speakers from the World Bank and African Development Bank will address a key session looking at infrastructure development as a basis for integrated ICT initiatives.

Communications Minister Dina Pule said the ICT Indaba sought to ensure that ICT fulfilled its potential as an enabler of economic growth and job creation, not only in South Africa but throughout the continent.

"I take pleasure in inviting our compatriots across the Diaspora to our country to partner with us, the ICT industry, labour and civil society as we enter a bold partnership that seeks to shape the development of the continent," Pule said in a statement on Tuesday.

SAinfo reporter

South Africa's drinking water is among the best in the world, and the country remains one of few in which water can still be consumed from the tap, Water and Environmental Affairs Minister Edna Molewa said in Cape Town on Monday.

Releasing the 2012 Blue Drop report during the Water Institute of Southern Africa Conference at the Cape Town International Convention Centre, Molewa said 98 of the country's municipalities were awarded Blue Status this year, up from 66 last year.

The average national Blue Status score jumped from 72.9% last year to 87.6% this year.

The scores have increased year-by-year since the first Blue Drop report was released in 2009, when municipalities notched up a national average of 51.4%.

In all, 153 of South Africa's 287 municipalities and 931 water systems were audited for this year's report.

Not just a quality audit

Molewa stressed that just because a municipality was not awarded Blue Drop status, it did not mean that their water remained unfit for human consumption.

This is because Blue Drop certification goes beyond the quality of drinking water to include aspects such as risk management, operations and asset management of water services.

The programme is not a voluntary programme but an incentive-based regulatory initiative which requires water services institutions to provide information in line with the legislative requirements of Section 62 of the Water Services Act.

Top performing municipalities

In this year's Blue Drop report, Ekurhuleni came out as the top municipality with a score of 98.95%, followed by the City of Johannesburg with 98.92% and Mogale City with 98.79%.

Ethekweni (Durban), Tlokwe in North West province and the City of Cape Town were the next highest scoring municipalities respectively.

Molewa commended the Victor Kanye Local Municipality (formerly Delmas) in Mpumalanga province, which increased its score from 18.26% last year to 80.07% this year.

She also congratulated the Thembisile Local Municipality, also in Mpumalanga, which increased its score from 27.77% to 78.30%.

15 municipalities warned

However, Molewa said she was concerned about the worst scoring municipality - Koukamma (5.6%) - and iKwezi (7.9%), both in the Eastern Cape, which are among 15 municipalities that have received warnings over the quality of their water.

People living in these municipalities "have been informed not to drink the tap water without improving the quality first by either boiling or using other methods of purification," Molewa said, adding that her department was working closely with these municipalities to bring their water quality up to standard.

Molewa said that, despite the 15 warnings, her department now knew where the problems were and would be attending to them.

Water board, private sector involvement 'key'

Helgard Muller, acting deputy director-general of policy and regulation in the department, said the involvement of water boards and the private sector were key to improving the management of South Africa's water services.

While other countries which had water audits only looked at the quality of water, the department also considered risk management and asset management in the Blue Drop report.

Of the 98 municipalities that achieved Blue Drop certification, 38 were serviced by water boards and about 20 by the private sector.

The top performing province was Gauteng with a score of 98.1%, followed by the Western Cape (94.2%) and KwaZulu-Natal (92.9%).

The remaining six provinces all notched up scores below the national average of 87.6%, with Mpumalanga the worst performing province at 60.9%, followed by the Northern Cape (68.2%).

Source: BuaNews

Inward investment into Africa has more than doubled over the last decade as investor perceptions of the continent have begun to shift, but a significant perception gap still remains to be closed, according to Ernst & Young's second African Attractiveness Survey, released last week.

According to the survey, growing optimism and confidence among international investors saw new foreign direct investment (FDI) projects into Africa growing from 339 in 2003 to 857 in 2011 - with new project numbers in 2011 almost back up to the levels last seen in 2008, before the global financial crisis hit.

The mind-shift has been shared, and to some extent led, by African investors themselves, with intra-African investment increasing exponentially, from 27 new FDI projects in 2003 to 145 in 2011 - 17% of all new FDI projects on the continent last year.

Sixty percent of the 505 global executives surveyed by Ernst & Young said perceptions of Africa as a business location had improved over past three years, with three-quarters of them predicting further improvements in the continent's attractiveness over the next three years.

Ernst & Young forecast overall African gross domestic product (GDP) growth of between 4% and 5% per annum over the next decade, with FDI into Africa reaching US$150-billion by 2015.

Perception gap 'remains to be closed'

While the survey paints an overall positive picture of growing confidence in Africa's prospects, the results also highlight a stark difference in perception between CEOs who already have a business presence in Africa and those who do not.

"Of those who believe that Africa's growth prospects in the near term are significantly positive, half have a dedicated Africa strategy in place, and 92% have an active business presence on the continent," Ernst & Young said in a statement last week.

The perception gap is reflected in the fact that, despite the positive African growth story - including strong GDP and FDI growth forecasts for the next decade - "the continent still only attracted 5.5% of global FDI projects in 2011.

"While this is up from 4.5% last year and is, in fact, the highest proportion of global FDI that Africa has ever received, reservations remain among those who have not yet invested into the continent."

Ajen Sita, Ernst & Young managing partner for Africa, noted that the continent as a whole was still attracting fewer FDI projects than India and far fewer than China.

"There is still clearly work to be done by Africans - government and private sector alike - to better articulate and 'sell' the growth story and investment opportunity for foreign investors," Sita said.

Intra-African investment leads the way

A key highlight of Erns & Young's report is the growing self-belief and commitment by Africans to move the continent forward, reflected in the substantial growth of intra-African investment.

Between 2003 and 2011, according to the survey, there has been 23% annual compound growth in intra-African investment into new FDI projects. This growth has been accelerating, with the growth rate up by 42% since 2007.

This growth is being led "by the respective regional powerhouses of Kenya, Nigeria and South Africa," Ernst & Young said.

"All three of these African economies are ranked among the top 20 investors into the rest of the continent between 2003 and 20011, and since 2007 the growth rate in investment from Kenya, Nigeria and South Africa has been 78%, 73% and 65% respectively.

Sita said there had been "a radical shift in mindset and positioning over the last decade, with Africans themselves increasingly leading from the front by providing African solutions to Africa's challenges.

"Clearly work still remains to be done, but pushing ahead with key initiatives such as regional integration and investment in infrastructure will ensure that Africa remains on a sustainable growth curve."

Increasing growth from developing countries

On the sources of Africa's inward investment, the survey found that this came from across the world, with strong growth in project numbers from "rapid-growth" (or developing) and developed markets alike.

Among the former, India has led the way as the fourth-largest FDI investor by number of projects since 2003, with annual compound growth of 46% since 2007.

China and the United Arab Emirates remain prominent too, but there is high growth in investment from an increasingly diverse range of other developing countries, with South Korea, Saudi Arabia and Turkey among those at the forefront.

"At the same time, and despite the challenges they face, there has also been robust growth in investment into Africa from many developed markets," Ernst & Young said. "In the period from 2007 to 2011, UK project numbers have been up 27%, with the US and Germany also both increasing by 21%."

According to Mark Otty, Ernst & Young managing partner for Europe, Middle East, India and Africa, the competition for global FDI is intensifying, with developing countries "not only dominating investor attention and capital flows, but also playing an increasingly strategic role in defining the global economic agenda.

"African countries must position themselves appropriately in this shifting landscape to attract a greater proportion of the investment that will accelerate growth and development," he said.

Moving beyond dependence on commodities

In addition, according to Ernst & Young, the growing diversification of FDI identified as a key trend in last year's survey has continued this year "with even greater levels of investment into less capital-intensive sectors".

This has resulted in a growing number of FDI projects in manufacturing, business services and sales, marketing and support, highlighting a shift away from the extractive commodity-based activities on which Africa has historically been dependent.

"In the midst of a global economy that is being reshaped, with growth and capital flows shifting from north to south and west to east, Africans have a unique opportunity to break the structural constraints that have marginalized the continent for decades, if not centuries," Sita said.

SAinfo reporter

First-world infrastructure plus a vibrant emerging market equals huge investment potential!

Nthambeleni Gabara

Rural Development and Land Reform Minister Gugile Nkwinti has urged beneficiaries of land redistribution to use their new assets productively to help them participate in the mainstream of South Africa's economy.

"Our message to land claimants is that ... once we give you the piece of land, you must use it productively to fight poverty and unemployment," Nkwinti said at a ceremony marking the restoration of 12 503 hectares of land to the Lomshiyo Community outside Barberton in Mpumalanga province on Saturday.

"This government is moving faster in redistributing land to its rightful owners through negotiated settlements with the private sector because the majority of our people want their ancestral land [for farming]," Nkwinti said.

"We don't want this timber plantation farmland to become a white elephant."

'Like coming back to life from the dead'

An estimated 2 593 people, comprising 485 households, of which 203 are headed by women, will benefit from the handover of the land.

The chairperson of the Lomshiyo community, Mandla Mavuso, has big plans for its use and development.

"Getting our ancestral land back feels like coming back to life from the dead," Mavuso told BuaNews. "We are willing to work with those who have been using this piece of land. We want to keep this farmland productive.

"We will also look at the possibility of turning this area into a tourist destination," he added.

The restored land was part of Shannon Properties - who have been using it as a timber plantation - as well as other surrounding farms. There are 58 farms in total in the area, and 90 percent of them are privately owned.

'Agricultural sustainability the goal'

Nkwinti told BuaNews that the sustainability of South Africa's agricultural sector was a key goal of the state's land reform programme.

Nkwinti added that he was pleased with progress made in the redistribution of land in Mpumalanga province, while the 16 outstanding land claims in the Free State would be finalised in June this year. The Eastern Cape still had 600 outstanding cases, he said.

The government has set itself the goal of redistributing 30 percent of South Africa's land to historically disadvantaged communities by 2014.

"By speeding up the process of redistributing land to its rightful owners, we think that we are moving towards achieving that mission," Nkwinti said.

Source: BuaNews

20 April 2012

Deputy President Kgalema Motlanthe has assured Ghana of South Africa's loyal support, saying he hopes the two countries can work together in tackling the challenges facing the continent.

Motlanthe is in Ghana for a working visit which could see the two countries cooperating in the energy sector, among others.

Relations between South Africa and Ghana, one of the most stable multi-party democracies in West Africa, are very good, with both countries maintaining residential diplomatic missions in each other's capitals.

'Shining example of democracy'

Speaking at a gala dinner held on his behalf in Accra on Thursday, Motlanthe congratulated Ghana on celebrating its 55th anniversary of independence in March.

"As one of the African countries holding elections this year, we look up to your excellent track record and good governance in holding free and fair elections. We hope your country will once again serve as a shining example of democratic change."

Motlanthe added that he was pleased that Ghana, like South Africa, continued to play a critical role in peacekeeping and upholding good governance in Africa.

While in Ghana, Motlanthe will hold talks with his counterpart, Dramani Mahama, as well as pay a courtesy call on President John Evans Atta Mills.

On the agenda, according to the Presidency, will be cooperation in areas such as energy and energy-related technology, security, and environmental issues, including the management of national parks.

Trade volumes on the increase

According to the Department of International Relations and Cooperation, Ghana represents a the biggest export market for South African goods in West Africa after Nigeria.

In recent years, trade between the two countries has grown significantly, with South African exports increasing from less than R1-billion in 1998 to over R3-billion in 2009, while imports from Ghana have increased over the same period.

Exports have included vehicles, machinery, mechanical appliances, electrical equipment, base metals, aircraft, vessels and associated products.

"While total trade volumes are still relatively low in global terms, it is expected that these figures will grow," the department said.

There are more than 80 South African companies registered in Ghana.

Motlanthe is being accompanied on his trip by Energy Minister Dipuo Peters, Public Enterprises Minister Malusi Gigaba, and Deputy International Relations Minister Ebrahim Ebrahim.

BuaNews