Posted: August 17, 2015
Outward Selling Mission in the Republic of Ghana
|Honorable Minister Dr. Spio Garbrah, the Ghanaian Minister of Trade and Industry
High Commissioner of SA in Ghana: Lulu Xingwana
Senior Government officials
Ladies and Gentlemen
It is an honor for me to address this distinguished audience. I would like to thank the government and the people of Ghana for the warm hospitality that has been extended to me and my delegation since we arrived in Accra.
I am accompanied by a strong delegation of 30 business people ready to engage and do business in this country. The objective of this mission is aimed at exposing South African companies to further linkages and opportunities to export value added manufactured products/services and to exploit investment opportunities. This outward selling and investment mission to Ghana has a sectoral focus on agriculture and agro-processing, furniture and wood processing, infrastructure, built environment professionals, energy and mining.
Bilateral relations between South Africa and Ghana are currently driven by a Permanent Joint Commission for Cooperation (PJCC) which was established in May 2007 and led by Ministers of Foreign Affairs from both countries.
The third session of the PJCC was hosted by Minister Maite Nkoana-Mashabane of the Department of International Relations and Cooperation (DIRCO) on 5 November 2013 in South Africa. This session was preceded by a Senior Officials Meeting (SOM) on 3-4 November 2013 wherein officials from my department co-chaired the Trade, Agriculture, Transport and Tourism Working Group. Bilateral economic relations are concretised through the bilateral trade agreement signed in October 2000. In August 2011, the dti and their Ghanaian counterparts signed a Memorandum on Economic and Technical Cooperation as a framework for increased collaboration on trade, investments and technical capacity-building. Therefore, this Outward Selling and Investment mission from South Africa forms part of the implementation plan of this MoU that was signed between the two countries.
South Africa’s President HE Jacob Zuma undertook a State Visit to Ghana in November 2013 to assess progress regarding the implementation of seven Agreements/Memoranda of Understanding (MoU) that were signed during the State Visit to South Africa by the late President of Ghana Dr. John Atta Mills. During President Zuma’s State Visit, Minister Davies and his Ghanaian counterpart, Haruna Iddrisu, deliberated on a number of issues pertaining to trade and investment between the two countries.
The two Ministers impressed upon the business sectors to continue to invest and exploit advantages in each other’s markets. Minister Davies also encouraged his counterpart that Ghana should take advantage of the Saldanha Bay Industrial Development Zone (IDZ) in South Africa. This IDZ is a world class facility that can be used for servicing Ghana’s oil and gas rigs and broader servicing the needs of upstream exploration and production. Before the State Visit by President Zuma, then Deputy Minister of Trade and Industry, Ms Elizabeth Thabethe led a Business Mission to Ghana in June 2013 accompanied by 29 business people on a mission to deepen and strengthen trade and investment relations between the two countries. During this mission, Deputy Minister Thabethe and Minister Haruna Iddrisu placed emphasis on building processing capabilities so that the two countries are able to export value added exports.
The bilateral trade between South Africa and Ghana has experienced an upward trend between 2010-2014, growing from R2,6 billion to R10,8 billion respectively representing an annual average growth rate of 76% during that period. However, total trade between the two countries has been in favour of Ghana. For example, in 2014, Ghana’s exports to South Africa amounted to R7 billion whereas South Africa’s exports to Ghana registered R3.7 billion. Interestingly, South Africa’s main exports to Ghana consisted of value added products such as machinery, vehicles, iron and steel products, chemical products and electronic equipment whilst imports from Ghana were dominated by mineral fuels which accounted for 95% of Ghana’s total export basket to South Africa, followed by machinery and vehicles which contributed a mere 2% and 1.4% of Ghana’s exports to South Africa respectively.
In order to address concerns from the bilateral trade, the two countries should work together to interrogate issues that could help unlock the impediments that stand before improved commercial cooperation through engagement on issues of mutual concern on areas of trade and industry.
From an investment perspective, South Africa has contributed positively to Ghana’s objective of growth and development through a number of investment projects within Ghana. Between January 2003 and February 2014 a total of 43 FDI projects by South African companies were recorded. These projects represent a total capital investment of R102.5 billion which is an average investment of R8.5 billion per project. During the period, a total of 6,766 jobs were created.
The South African companies that have invested in Ghana are (inter alia) MTN, AngloGold Ashanti, Goldfields, SABMiller, Woolworths, Engen, Hytec Engineering, Afripa Telecom, African Explosives Limited, Multichoice, Pick n Pay, Alliance Media, Steeledale, Stanbic Bank, Shoprite Checkers, Sherwood, Steers, South African Airways and 3M to mention but only a few. The Edcon Group (Edgars and Jet stores) have also been opened at the new West Hills Mall in Accra.
Recent investments include Rand Merchant Bank (RMB) officially opening a branch in Accra in February 2015. Others include investments by MTN Ghana and Pick n Pay.
Ladies and gentlemen.
Clearly, Ghana is a strategic trade partner for South Africa, however, I believe there exists further potential to increase trade in value added products between our two countries and the region. Thus, access to each other’s markets as fellow African countries serves as a draw card for direct investments and it serves to transform the region and Africa from small fragmented markets to one large market where our companies can achieve economies of scale, lower production costs and ultimately global competitiveness. If done properly this will foster economic growth, employment creation and improved standards of living for the people of our two countries. South Africa continues to promote an approach to regional cooperation and integration that seeks to correct any inherent trade imbalance and lack of intra-Africa investment.
Furthermore, the growth and development of our two countries, lies in diversifying our economies so that we are not only exporters of raw materials, thus becoming vulnerable to fluctuating global commodity prices, as is the case currently with the drop in commodity prices. We need to build industrial and manufacturing capacity in each other’s economies. Furthermore, the importance of sound investment in infrastructure development in terms of roads, rail, ports, telecommunications and removal of regulatory barriers that have a negative impact on movements of goods and services, cannot be over-emphasized.
Ladies and gentlemen.
This Business Forum takes place on the back of ongoing uncertainty, particularly in the Eurozone – the latest being the Greek sovereign debt crisis – which continues to threaten the rate of recovery in the global economy. According to the African Economic Outlook, Ghana registered relatively commendable economic growth in 2014 but the economy was faced with major challenges in the form of sharp currency depreciation, deepening energy crisis, deteriorating macroeconomic imbalance, and rising inflation and interest rates. However, economic growth across much of the continent has remained robust, with seven of the fastest growing nations coming from Africa.
This story suggests that transformation is under way across Africa in both economic and political arenas. The African continent is the next frontier of economic growth and development. Africa’s time has come. This is opportune as it positions Africa well to be part of the new global order that will be led by the developing south. Africa’s enormous reserves of raw materials, 60% of the world’s unused arable agricultural land, a young growing population, a growing middle class with considerable purchasing power, and urbanisation alongside steady improvements in economic governance are all factors which contribute to Africa becoming the leading source of global economic growth. Currently, Africa offers the highest returns on investment of any region.
An important lesson from the 2008-09 ‘Great Recession’ is the importance of intra-Africa trade as a basis for sustained growth. Intra-Africa trade is estimated at about 10% compared with 40% in North Africa and 60% in Western Europe. Undoubtedly, the expansion of trade among sub-Saharan African nations holds the key to faster growth and development to the benefit of all its citizens. To unlock this potential, countries will have to focus more on trade facilitation, including the simplification and modernisation of trade procedures.
In this regard, South Africa’s priority is to champion an ambitious integration and development agenda in Africa in respect of our engagements in SACU, SADC and in the recently launched Tripartite Initiative to integrate SADC, the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA). The T-FTA will combine the markets of 26 countries with a population of nearly 600 million people and a combined GDP of US$1 trillion, providing the market scale that could launch a sizeable part of the continent onto a new developmental trajectory. The T-FTA will form the basis for an Africa-wide FTA, which is expected to create a market of US$2.6 trillion.
This will address the challenge of small and fragmented economies in Africa, lack or slow pace of industrialization, poor infrastructure and mechanization. A larger, more integrated and growing market would enhance the interest of foreign investors in Africa and provide a basis for enhanced intra-African trade. This envisaged Continental FTA (C-FTA) will therefore widen and build on the integration initiatives already underway.
In light of all this, I hope the business mission and other planned initiatives of this nature will provide further platforms to allow economic exchanges and we look forward to greater trade, investment and cooperation in the future. I also look forward to further capacity building programmes and Joint Ventures between business people from both South Africa and Ghana.