Minister of Trade and Industry, Mr Ebrahim Patel;
KZN Leader of Government Business and MEC for EDTEA ,Ms Nomsa Dube-Ncube;
President and Chairman of Afreximbank, Dr Benedict Oramah;
Mayor of EThekwini, His Worship Cllr. Mxolisi Kaunda;
Members of the Diplomatic Corps;
Senior Government Representatives;
Captains of Industry;
Social Partners;
Distinguished Guests;
Ladies and Gentlemen;
Good Morning to you all and once again, welcome to the warm and hospitable province of KwaZulu-Natal.
I wish to extend a sincere word of gratitude to Dr Benedict Oramah for his incisive and eloquent address on the progressive work that is undertaken by the African Export-Import Bank (Afremixbank) to help us realise Africa’s sustainable growth and development trajectory.
An institution like Afreximbank gives us reason to believe that the dream of the Africa that we want which is articulated throughout the AU’s Agenda 2063 is attainable.
Agenda 2063 remains Africa’s strategic framework for the socioeconomic transformation of the continent over the next five decades.
Africa’s partnership with Afremixbank gives us confidence that we remain poised to harness the continent’s competitive advantages embodied in its people, history, cultures, natural resources as well as geo-political position to effect equitable people-centred growth and development.
Through such a partner, our continent is set to grow and accelerate the financing of projects and programmes aimed at eradicating poverty, developing human capital, social assets, infrastructure and public goods.
In support of the implementation of the agreement for the African Continental Free Trade Area (AfCFTA), a series of initiatives were presented by Dr Oramah during the 12th Extraordinary Summit of African Union.
The provision of financial resources to exporters is supportive of export product development, export production, export marketing and export credit at pre-shipment and post-shipment stages. Against this background specialized financial institutions like Afremixbank play a crucial role in availing the much needed tailor -made funding programmes to exporters.
This coastal province of KwaZulu-Natal has identified export development as a key pillar to grow the economy and create employment. We are investing, for instance, in agriculture and agro-processing to ensure that there is value addition and commercialisation for export.
As a province, we seek to create no less than 10 000 jobs between 2019 and 2024 through intensive export promotion.
Ladies and gentlemen, we remain steadfast to our endearingly maturing democracy and optimistic that this outcome is beginning to restore business and investor confidence, critical for growth development, and the full restoration of our people’s dignity.
In our quest to sustainably develop South Africa and improve the welfare of our people, we are aware of the significance of good governance, transparency and accountability as important factors determining our international credit rating, a factor germane to foreign direct investment inflows into the country.
South Africa is a member to a number of international and regional trading arrangements. To mention just a few, South Africa is a member to Southern African Development Community (SADC), South African Customs Union (SACU), African Growth and Opportunities Act (AGOA), Cotonoua Agreement (Soon to be replaced by Economic Partnership Agreements, EPAs), BRICS, World Trade Organisation (WTO) and a number of bilateral trade agreements (BTAs).
In addition, KwaZulu-Natal province is in full support of the African Free Areas initiative which is envisaged to increase intra-Africa trade. The African free trade area presents any African company, no matter its location, with a market of about 1.2 billion people within the African continent before even looking at other international markets.
In 2016, South Africa’s exports to the African market were valued at R315.2 billion whilst the country imported goods valued at R112.8 billion. On the other hand, KwaZulu-Natal’s exports to Africa in 2016 were R37.74 billion whilst imports were valued at R5.68 billion. Our aim is to grow these numbers as we capitalise the immense opportunities bequeathed upon us by these trade agreements.
Ladies and gentlemen, the growth of the South Africa economy in the future pivots around our ability to grow South-South/ intra-Africa trade and investment in the continent.
The success of the Asian countries was also premised on their ability to promote exports through a combination of policies such free trade, convertible currencies, and macroeconomic stability and through a set of innovative approaches such as export processing zones, duty exemption schemes, and incentive packages for foreign direct investment and special economic zones.
Ladies and gentlemen, we do not desire to replicate all of these schemes here, but it suffices to note that as a province we are ardently pursuing the development of SEZs and Industrial hubs in the province. The sectors that we have identified in most of these industrial hubs have high export propensity. In the implementation of these SEZs and Industrial hubs, we also emphasize the importance of exports.
The significance of exports in economic growth is evidenced by a large contribution of exports to GDP in many successful countries. One can cite many examples here but it is critical to mention China and Germany.
China’s export to GDP ratio is 39.9%, Germany’s ratio is about 50% compared to 25% of South Africa and about 18% for KZN.
It is, therefore, a clear observation to state that the most successful economies of the world are those that are able to diversify their export basket. Our quest is to be able to grow the contribution of the export sector to GDP from the current levels to comparable levels with successful economies of the world.
In advancing regional integration, KwaZulu-Natal views infrastructure development as critical to grow trade and investment in the region. As part of our economic development strategy, the province continues to invest in seaport, airport and road infrastructure.
We are also placing emphasis on developing regional corridors linking our neighbouring countries such as Mozambique, Swaziland and Lesotho. We are in the process of developing border development plans aimed at advancing regional integration at our Boarders with these three countries.
As part of our industry development and trade policies, we continue to work with local companies to increase offshore investments in our neighbouring countries and encouraging regional companies to invest in our province. To improve the ease of doing business in KZN, in 2017, we set up a one-stop-shop for investment in Durban, and two satellite stations at the Dube Trade Port and Richards Bay Industrial development zones. Already, our SEZs are becoming a magnet for international investments aimed at growing export into the regional markets.
Globally, it is evident that, no matter how tiny a country is viewed at the international stage, there is a massive appetite to attract foreign direct investment as countries place themselves on the global stage.
We live in an age of intense globalisation and Africa’s appetite for regional integration is burgeoning.
Africa has become one of the most attractive investment destinations and indeed a new frontier of growth. Increasingly, countries around the world are competing more robustly for a greater slice of the market in order to help grow their economies.
As this unfolds, South Africa and indeed Africa cannot afford to remain docile when other regions are stepping up efforts to attract foreign direct investment. Countries and regions continue to explore opportunities of improving their competitiveness through infrastructure development amongst other priorities.
Africa is also geographically located at the centre of the world, having the equator cutting right through the centre of the continent, giving it a strategic advantage for trade.
Sub-Saharan Africa, together with other regions in Asia and East Europe have some of the fastest growing economies in the world. Some of these economies are in Southern Africa. It has been argued that Sub-Saharan Africa is the new economic frontier, and countries are embarking on massive infrastructural programmes to ease the cost of doing business.
Increased economic activity in the last decade has seen Sub-Saharan Africa region become a more attractive destination for business.
In 2019, seven of the top ten fastest growing stable economies globally are situated in Sub-Saharan Africa, and there is something of a tug-of-war among global super-powers over this region where new markets and opportunities can be found.
Among these countries we can count Ethiopia, Angola, Rwanda, and Ghana. With its population expected to grow to 2.34 billion by 2050 from the current 1.1 billion people, Sub-Saharan Africa continues to be a lucrative investment destination.
Ladies and Gentlemen, our beautiful country South Africa and beloved province of KwaZulu-Natal are strategically located as a gateway to the African continent and to the world at large.
In its general meaning, gateway can be defined as network point that acts as an entrance to another network. South Africa’s position as a gateway can be explained in three distinct ways.
Firstly, South Africa’s location which enjoys a unique status of being the only African State that possesses both the Atlantic and Indian Ocean shores, and accordingly, the country shares border with seven countries.
Secondly, from a logistics point of view, a gateway is also defined as nodal points where intercontinental transport flows are being transhipped onto continental areas and vice versa. In this respect, South Africa and more so, KwaZulu-Natal is home to Africa’s two largest ports Durban and Richards Bay.
The Port of Durban is the busiest Port in Africa, while the Port of Richards Bay handles the largest volumes of cargo. This cargo includes; aluminium (accounting for 4% of the world’s total aluminium exports) and minerals like limonite and zircon derived from the largest sand mining operations in the world.
Each year, more than 4000 commercial vessels call at the Durban port. According to Ports Authority of South Africa, the container traffic is forecasted to grow at 8% a year.
The current estimated yearly volume of container trade through Durban port is 2.69 million, which is expected to grow between 9 million and 12 million by 2040.
However, in its current status, the port is struggling to increase capacity to meet container handling and storage demand with a maximum capacity of 4.8 million. Therefore, the planned dig-out port in Durban is envisaged to alleviate pressure on the existing port whilst also providing a solution for the province to meet its capacity demand.
Thirdly, South Africa possesses relatively well developed transport infrastructure such as road and rail networks, ports and international airports. This provides direct linkage to the region and the world at large.
Using this comparative advantage, we can fully optimise our membership to Southern African Development Community (SADC), Southern African Customs Union (SACU) and BRICs to advance economic integration in Southern Africa, emerging markets and beyond.
Since the advent of democracy in 1994, we have pursued policies to promote trade and regional integration in the country.
Recently, KwaZulu-Natal stepped up efforts and embarked on a mission to take advantage of this gateway status through the development of a Provincial Growth and Development Strategy (PGDS), which encapsulates our 2030 vision. Through this vision, KwaZulu-Natal aims to position itself as the gateway to South Africa and the entire Southern African region.
Government is working tirelessly to develop a robust economy that can sustainably create employment, fight poverty and become more globally competitive. Some of the programmes we are implementing as a province include among others, the regional industrial hubs, special economic zones (SEZs), export development and a number of sector specific interventions.
It is clear in this vision that KwaZulu-Natal provincial government aspires to act increasingly as a transmission belt between global and regional markets and production facilities. This vision entails the need to improve operational efficiency at our ports and the general logistics value chain in the province. Immense investment opportunities exist in Tourism, Maritime, Industrial Economic Hubs, and the Aerotropolis.
Let me elaborate a little more on these four pillars as catalysts to steer the KZN provincial economy toward becoming a world class gateway to the African market.
Firstly, tourism development in KwaZulu-Natal is guided by the provincial Tourism Master Plan that identifies areas for investment such as product development, construction of resorts, development of blue flag beaches, revamping our heritage sites and increasing connectivity in the province.
It is a known fact that some of the richest regional economies of the countries of world are located along the coast. We can draw examples from the USA, China Australia among other countries.
Whilst this is the case globally, there appears to be a missing link in KwaZulu-Natal.
With a 600km coastline and two of the largest ports in Africa, a population of about 11 million, surely KZN is supposed to be the economic powerhouse of the country.
As we aspire to capitalise this comparative advantage, the provincial government has developed an integrated maritime strategy which aims to advance this sector and contribute to the provincial economic output.
The third pillar focuses primarily on re-industrialization of the province through the development of the regional Industrial economic Hubs.
Global trends have shown that developed countries are what they are today through industrial development. Hence, industrialisation policies have proved to be a cornerstone for growth and job creation. In the modern economy, re-industrialization of specific sectors of economy is a tool to grow the economy and alleviate poverty.
Regional Industrial Economic Hubs serve as a key strategic intervention to address spatial economic development challenges through decentralization of industrialization. It aims to promote manufacturing & beneficiation of products, facilitate exports and job creation. The regional industrial economic hubs are envisaged to provide value chain linkages with the Special Economic Zones at Dube Trade Port and Richards Bay.
The last pillar of our economic development plan deals with the development of the Durban Aerotropolis around King Shaka international airport.
KZN Aerotropolis is being developed against a background of a purposely developed new King Shaka international airport which is expected to drive economy growth in the province through global connectivity, speed and agility.
With the goal of improving KwaZulu-Natal’s global connectivity, speed and agility, the Durban Aerotropolis becomes a launch pad for infrastructure development. We, believe, Durban Aerotropolis is a reality, given the state of the art international airport, Dube Trade Port (DTP), iConnect, Agrizone and the green field around the airport to advance industrial development and new airport city.
The Durban Aerotropolis is already a magnet of international companies who are locating within the Dube Trade Port SEZs. A few weeks ago we welcomed Mara group, the first African mobile phone manufacturing company.
The province further places infrastructure development as an apex priority to advance economic development in the province in an endeavour to consolidate our gateway status.
A number of infrastructural programmes are on the cards, and these include, amongst others, the dug-out port in Durban, dry port development at Cato Ridge, dedicated road/rail links to King Shaka, Durban/Gauteng rail upgrade and regional airport upgrades.
The implementation of these projects will inevitably position the province as a major trade gateway into South Africa and its hinterland. This presents the province with an enormous opportunity to consolidate its position as the gateway into these markets through developing rigorous infrastructure to allow easy access to these regions.
We all recognise that we continue to live through challenging economic conditions which have been difficult for both consumers and producers, but the signs are encouraging.
Creating the right conditions for growth is a means to ensure that right decisions are made to enable KwaZulu-Natal to compete in what is essentially a global race.
We believe, to meaningfully participate in this race, the starting point is to build on our unique attributes and natural endowments as well as our confidence and stimulate the local markets in creating partnerships with business.
Foreign corporations wanting to enter the African market will begin to recognise the orchestral synergy of South Africa’s improved environment to conduct business. As South Africans, whilst we consolidate our traditional source of investment in Europe, the US and Australia we are also mindful of the growth of the emerging markets particularly those in the African continent.
Our future success will be built on the ability to develop transport links with the rest of Africa and the world alike, keeping the province in the global race.
Lastly, those who said ‘the earliest bird catches the fattest worm’ were not far from the truth. Ladies and gentlemen, I would like to urge all potential investors to take advantage of the opportunities KwaZulu-Natal is offering especially on all the catalytic projects, I presented earlier.
I take this opportunity to thank the organisers of this conference for giving me the opportunity to share some of government’s plans to develop a formidable and resilient regional economy in South Africa.
And the African Export-Import Bank must know that their investments in KZN are not only needed, but that they will remain secure and profitable. In KZN, they indeed have an ally they can surely rely on.
Before I sit down, please allow me again to join our President and the people of our country to congratulate the Springboks for triumphing in the 2019 Rugby World Cup in Japan. Indeed South Africa remains alive with endless possibility.
Let Us Grow South Africa Together!
I thank you.