INVESTMENT prospects for Africa and South Africa look bright, Trade and Industry minister Rob Davies said yesterday.
Speaking to Sapa by phone from the World Economic Forum (WEF) in Davos, Switzerland, he said an increasing number of investors attending the event were turning their gaze south.
“A number of investors [at Davos], from a range of industries, are beginning to look at the African continent. This includes people who have not been here before, or people who’ve run their African operations out of the Middle East [or elsewhere].
“[They] are now beginning to explore the possibilities of increasing their investments in … Africa, and also looking to South Africa as an important gateway to run operations in the southern part of the African continent.”
Davies said it was noticeable to those attending the forum that Africa was coming of age economically.
“The future of the African continent seems to be moving into more value-added activities, industrialising our continent. And that’s our ambition. One of the things … that is noticeable here [in Davos], is that Africa has moved out of the fringes and is becoming increasingly seen as part of the mainstream …”
“The prospects for Africa continue to be bright, with the continent as a whole anticipating to raise the growth rate from about 5,1%last year, to 6,1% this year.
“And for South Africa also to increase its growth rate to 3,2 percent this year — that’s the IMF [International Monetary Fund] estimation.”
An area of high interest was South Africa’s infrastructure development plan.
“[There is] considerable interest that I’ve detected in the infrastructure development programme. A lot of companies around the world realise that we’re quite serious, and we have a good track record.”
Government had to date spent one trillion rand on much-needed infrastructure development, and this figure was poised to increase.
Among the challenges facing the country was how to create a new, strong competitive advantage for its manufacturing sector. In this regard, South Africa had to “bite this bullet” of adding more value to its mineral products, an issue that had been long talked about.
“This means that we have to create a price advantage for beneficiating raw products inside South Africa. So we’ve got to make sure that the raw material is available at a competitive price for those activities.” Davies said there was a need to establish support measures around this. He signalled what he called a “fairly significant change” in the country’s trade profile over the next few years.
“We’re very conscious of the fact that we’re talking about industrialising the African continent.
“That means we can find opportunities for our products on the African continent, but we’re also going to have to accept that we will have to take products from other countries, and that other countries will also be industrialising. So I think we’re looking at a fairly significant change in our trade profiles, in the medium term, with the African continent.”
This change should provide “major advantages” for local industry.
On the current rand exchange rate which recently hit a record low against the U.S. dollar — he said this was not necessarily a bad thing for manufacturing.
“[I’m] not so sure that the [current] exchange rate of the rand is necessarily a bad thing for our manufacturing industry. I don’t think it’s the answer, and it could [create] cost pressures.
“But certainly when we had an overly-valued exchange rate a few years ago, that was a serious impediment to manufacturing, and also to exports in general. So … it’s an opportunity as well as a challenge.” The theme of this year’s meeting is “The Reshaping of the World: Consequences for Society, Politics and Business”.