Media statement by Minister Rob Davies on the implementation of the agreement between the Government of South Africa and the Government of Cuba on Economic Assistance
26 Sep 2014
During his state visit to Cuba, 6 - 8 December 2010, President Zuma announced that South Africa will offer Cuba an Economic Assistance Package of R350 million to assist with agricultural development process as well as reconstruction of infrastructure following the damage by hurricanes in 2008. Further, it is envisaged that the package will stimulate bilateral trade relations between South Africa and Cuba.
The package is as follows:
- Facility A: Grant of R40 million for the purchase of seeds [R5 million for purchase of seeds in South Africa and the remaining R35 million for purchase of seeds either in South Africa or elsewhere in the world].
- Facility B: Solidarity Grant of R 100 million for the purchase of goods in the South African Market.
- Facility C: R210 million credit line [with a first tranche of R70 million credit line available immediately on entry of the Agreement into force and the R140 million second tranche available after the repayment of the initial R70 million].
In order to give effect to the announcement by President Zuma, myself and the former Cuban Ambassador to South Africa, Mr. Angel Villa, signed the Agreement between the Government of the Republic of South Africa and the Government of the Republic of Cuba on Economic Assistance on 3 February 2012. This was followed by ratification of the Agreement by Parliament that was finalised in November 2012.
However, there were some delays in implementing the Agreement. The reasons for the delay include:
- the withdrawal of the Industrial Development Corporation (IDC) as a facility agent delayed operation of the package. This meant that a new facility agent had to be found and the dti is pleased that DIRCO through the African Renaissance Fund (ARF) agreed to act as the new facility agent. the dti and other government departments such as the Department of Agriculture, Forestry and Fisheries and the National Treasury as part of a Steering Committee will continue to provide support to DIRCO.
- further, the Agreement required some amendments to make it more exporter-friendly
The amendments were to take into account the following:
- the concerns expressed by potential exporters about the payment procedures in the Agreement. The exporters wanted to have some guarantee of payment prior to goods being shipped to Cuba.
- to ensure that small and medium enterprises also benefit from the Agreement by reducing the minimum of amount for transactions to R100 000 from R2.5 million.
- to extend the availability period in which Cuba can access the various Facilities mentioned above.
The availability period for the Facilities A and B have been increased from 24 months to 36 months from the date of entry into force of 21 November 2012. The availability period of Facility C Tranche A has been increased from 12 months to 24 months from the date of entry into force of 21 November 2012.
To reflect the fact that management fees are no longer going to be paid as the African Renaissance Fund (ARF) is part of Government and it will render its services free of charge. The signing ceremony today concludes the process of amending the Agreement and the package is now available for potential exporters to take advantage of.
Accessing the package
- All interested suppliers or exporters have to approach Cuba.
- The package is available to all South African companies that meet the requirement of at least 50 percent local content for goods and associated services.
- All goods are covered by the Agreement with exception of armaments, tobacco, and beverages with an alcohol content exceeding 24 percent per vol. Product coverage was done in line with the rules at the IDC as the facility agent at the time. Wines are covered.
- Once the Cuban importer and the South African exporter conclude an export contract, then supporting document will be presented to the ARF for payment.
Goods of interest to Cuba
- Cuba has indicated interest to initially procure onion seeds and plastic rasins from South Africa using the package.
- However, this does not prohibit companies from marketing other goods to Cuba
Havana International Fair
In November, Deputy Minister Masina will lead a delegation that will participate in the 32nd edition of the Havana International Fair, 2 - 8 November 2014. He will be accompanied by officials from the dti as well as a business delegation comprising of 17 companies. The products for the exhibition include food and beverages, domestic chemicals and paints, mining and sugar cane equipment, pumps and valves, pipes and hoses and electro technical products.
Participation in the Fair will provide an opportunity for the South African companies to expose their products to the Cuba market.
Statement issued by Sidwell Medupe, Department of Trade and Industry, September 26 2014
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