Posted: November 11, 2014
Speech Delivered by the Deputy Minister of Trade and Industry, Mzwandile Masina at Africa Economic Expansion Summit, held at Durban, 11 November
|The Premier of KwaZulu Natal, the honorable Senzo Mchunu
Members of the Council in the KZN government
Esteemed members of the business community
Esteemed attendants from all around Africa and the world,
Please allow me to take this opportunity to express my sincere gratitude for having been afforded an opportunity to address this year’s edition of the important Africa Economic Expansion Summit. On behalf of the government of South Africa and particularly the Department of Trade and Industry, I wish to communicate our profound appreciation for this platform, for it is a critical part of the necessary social engagement that our National Development Plan suggests to be central to the development outcomes we want to achieve. The sentiments of the National Development Plan are similar to the collective efforts that the African Union vision 2063 implores all of as Africans to be part of in order to achieve the collective African development of growth that we so much desire.
In the context of these two mutually reinforcing South African and African development visions, the Africa Economic Expansion Summit arises as an important opportunity for the South African government to share its strategic growth and development perspectives that African entrepreneurs can and should imagine their business ventures around. Similarly, because our development perspectives are anchored around the notion of the need for fostering collective African development, this summit correctly forces all of us to engage in afro-centric dialogue whose desired outcome is the mobilization of our collective energies towards the creation of a sustainable African development trajectory.
As a broad framework for the substance of today’s gathering, we have understood that the summit is concerned with fostering economic expansion and development that is not limited to one country but extends to the rest of Africa. This is because seemingly we all agree that the full development of each country in Africa is somehow dependent on the development of other countries in the continent. In respect of this correct common understanding, I wish to hereby reflect on some key points that the South African government would wish to share with this important summit.
As a starting point, it is common cause that the sessions of this summit are disaggregated into four critical sectors. These are energy, agriculture, manufacturing, transportation and social services. I suppose all of us agree that these identified sectors are correctly the central pillars to economic development that all countries should concern themselves about. It is in this regard that I wish to speak about our government’s attitude towards growth and development, with particular focus on the sectors that the summit has identified.
Firstly, the South African government has asserted that its social transformation programme will henceforth be guided by the strategic vision of the National Development Plan. The National Development Plan aspires towards the creation of an inclusive society in which all citizens enjoy an increasing standard of living underscored by economic relations that foster continuous and shared growth.
From the vantage point of ourselves in the Department of Trade and Industry, our Industrial Policy Action Plan, shortly referred to as IPAP, is understood as a crucial instrument through which the objectives of the National Development Plan can be achieved. IPAP is concerned with the strategic industrial policy choices that should be pursued in order to set in motion the economic growth trajectory that accumulates higher growth rates whilst decreasing the high unemployment rates we have through sustainable job creation. Implicit in this programme is the need to build a broad industrial base through which jobs can be created whilst attending to the broader development needs of our society. As I indicated earlier on, the vision for development that the National Development Plan articulates is echoed by the African Union’s 2063 Vision. In that context, what we say about South Africa’s development is almost the same with regards to Africa’s development needs.
In the global terrain of economic relations, African countries collectively enjoy the status of underdevelopment. Notwithstanding this reality, Africa is endowed with the world’s largest minerals advantage and therefore possesses great industrial potential on the basis of those minerals. Similarly, Africa has great potential in agricultural assets considering the vast areas of arable land that the continent has. Given the state of underdevelopment that the continent faces, it naturally arises that we have a huge infrastructure backlog that need to be addressed in our endeavors to improve the economic situation of the continent.
In the context of these points I have made above, this Africa Economic Expansion Summit must imagine a systematic strategy that can harness our existing potential, exploit the infrastructure backlogs we have and combing with the development objectives that African governments have to their people in a manner that places the African economy on a progressive development path. In this regard, I wish to shortly provide a value-chain that links all of the sectors that the summit is concerned with and also challenge this summit to engage with these views in order to enrich our understanding of development instruments as government.
On our part, we have come to the conclusion that the agricultural activities of rural Africa posses great commercial, and therefore developmental, potential that the continent needs. The central task before us is for all social forces to collectively work towards the conversion of our current agricultural enterprise from subsistence farming to commercial farming. This needs to be done on the basis of a strategy that builds the productive capacity of ordinary farming people to upscale their enterprises to sustainable commercial ventures. To this extent, government funding in capacity building is crucial and fiscal support in the form of preferential procurement from emerging farmers is critical in setting on motion the mass commercial agriculture wave that Africa needs.
Similarly, agricultural activities are also a base for the expansion of the manufacturing sector. Agro-processing industries are an important area that needs investment in Africa as part of the necessary interventions on product diversification for both the local and international markets. The important dividend for African governments is the potential for job creation that this will generate whilst at the same time guaranteeing the status of land as a sustainable capital-asset for rural land holders.
However, the greater potential of the manufacturing sector in Africa lies in the minerals endowment that we have. For centuries, Africa has been a source of minerals export that have underpinned European, American and Asian growth stories with little developmental dividends accruing to Africa. In the process of exporting raw minerals, Africa has been literally exporting job opportunities in the area of beneficiation, exporting jobs and revenue opportunities in the area of manufacturing finished products and the social investment that would have been acquired from locally based industries.
The point I am making is that African governments, business and social stakeholders need to imagine development within the context of retaining their natural assets within the African economy. This is in light of the fact that our mineral resources constitute critical industrial inputs that should be the basis of the expanded manufacturing base that must support Africa’s industrial growth objectives. Thus, instead of exporting raw mineral resources, we need to creatively utilize them to boost our manufacturing industries and generate higher revenues in the form of exporting finished products.
As South Africa, our Industrial Policy Action Plan has numerous sector-specific incentives targeted at promoting easy access in local manufacturing as opposed to exporting raw minerals. The critical point worth pursuing from today onwards is the need to build African economic linkages that will consolidate a broad African market for goods, capital and labour as a means to reduce our collective dependence on foreign markets for survival. Our collective industrial growth will best be enhanced by systematic efforts at regional African integration.
Related to this question of industrial growth, through the expansion of our manufacturing sector, is the question of building a capable infrastructure regime. This means that our infrastructure investment must be anchored around the need to boost African economic integrated manufacturing economies that are less dependent on foreign markets for survival. In this context rail, road and air infrastructure linking African countries on the basis of economic infrastructure integration is very important. This will require modern African entrepreneurship that is cognisant of Africa’s development needs and thus fashion its profit motives around the commitment of contributing towards the continent’s development.
Similarly, the most important question facing the whole world is around the development and efficient use of energy sources. For Africa, particularly in the context of investment attraction, this question arises in relation to whether we can provide reliable energy for sustainable business investment. Of course African countries have made significant strides in modernizing in order to meet the evolving investment demands that businesses and individuals have. Thus, the services sector has had to adjust significantly and fashion itself in a manner that guarantees easy means of doing business. In South Africa, we have made major advances in trying to ensure sustainable energy sources. Our investment of over a R1 trillion in nuclear energy is part of the strategic interventions we have made in this regard.
In the same light, improvement of our services sector like Information Communications Technology (ICT) is critical to foster faster business growth in a modern global information-based economy. Thus, partnerships between governments and the business community in the development of the ICT sector are critical if we are to promote information access for both businesses and African citizens.