African growth benefits SA firms
THE GROWTH of other African economies could benefit South African companies more, and therefore it was essential for the country to play a forefront role in facilitating regional economic integration, Deputy President Kgalema Motlanthe said at the Ernst & Young Strategic Growth Forum on Africa on Friday.
Motlanthe said evidence showed how growth in South Africa had affected the rest of sub-saharan Africa but it should be noted that African growth had also benefited the country. He said as incomes rose on the continent, opportunities for South African companies would grow enormously.
“We in South Africa are not resting on our laurels, being fully aware that African growth has to be driven forward. So we intend to play a central role,” he said.
Motlanthe said the country was ambitious to unite the three African economic regions – the Southern African Development Community, the East African Community and the Common Market for Eastern and Southern Africa – into a single free trade area by June 2014, under the “tripartite free trade” agreement.
But he said simply removing trade tariffs would not create an integrated regional economy because non-tariff barriers to trade were more restrictive to intraregional trade than tariff barriers.
Lack of certification systems and co-ordination between officials, poor cross-border and country infrastructure and lagging industrialisation were all challenges that made doing business in Africa costly.
Motlanthe said even though subSaharan Africa grew about 3 percent when the world’s rich economies shrank 2 percent in 2009 and although there was rising domestic consumption, the continent still received less than 5 percent of the world’s foreign investment inflows.
“We are labouring under the burden of our preconceptions. Many investors will view Africa as being a more challenging place to do business in than other emerging market regions; this is despite the fact that in the World Bank’s most recent Ease of Doing Business rankings, 14 African countries ranked ahead of Russia, 16 ahead of Brazil and 17 ahead of India,” he said.