Jobs campaign: How SA can become part of Africa's economic success story

Note to editors: The following statement was distributed at a press conference hosted in Braamfontein today by DA Shadow Minister of Finance Tim Harris, DA National Spokesperson Mmusi Maimane, and Western Cape Minister of Finance, Economic Development and Tourism, Alan Winde. A copy of the DA's document on "Opening South Africa for Business" can be downloaded here. 

South Africa is at risk of becoming a bystander to an economic boom on the African continent. Inefficient regulation and an unfocussed trade strategy undermine the opportunities for job creation and poverty alleviation that could derive from increased trade, particularly with the rest of Africa.

Right now, instead of being buoyed by African growth, South Africa's economic growth is being "dragged down" by the recession in Europe. It's time to diversify our international trade.

Every so often our economy is subjected to a seismic shock of the proportions of the Marikana mine massacre. Since Thursday last week we have seen a dip in the JSE all share index, a weakening in the rand and a spike in reports on the perceived political risks related to investment in South Africa. 

In the long term, if South Africa is to grow its economy and create jobs, we have to create a stable economic environment. This means an industrial relations dispensation that processes wage disputes fairly and efficiently. It means a criminal justice system that can maintain law, order and stability without unnecessary loss of life. It means economic policy certainty that will create and sustain investor confidence. 

We have to get this right, because we are missing an unprecedented opportunity to be part of an African economic success story that can help us achieve greater prosperity for all our people. 

To become part of this story in the short term, we need to urgently review what the DA believes is inefficient regulation and an unfocused trade strategy. 

In the first three weeks of the jobs campaign, we examined how the DA plans to break down the barriers that prevent people from accessing economic opportunities by (i) improving quality, access and accountability in the education system, (ii) enhancing youth unemployment, and (iii) creating an enabling environment for entrepreneurs. 

Today, the DA is presenting its plan to open South Africa for business. This plan focuses on improving economic ties with Africa and the world, removing the physical and bureaucratic barriers that inhibit cross-border trade, and encouraging foreign direct investment (FDI) through proactive economic diplomacy and by creating an enabling environment in which businesses can flourish. 

In successful middle-income countries like Brazil, Turkey and Indonesia, where high rates of economic growth have underpinned rising incomes and rapid declines in poverty and unemployment, governments have paid careful attention to developing smart trade policies and attracting high levels of FDI.

Our country is located in one of the fastest-growing regions in the world. Our location should provide lucrative opportunities for local businesses and entrepreneurs to market their goods. 

Both as a location to invest and as a market, the continent is alive with opportunities. The reality is that Africa will become one of the largest consumer markets in the world in fewer than ten years. By the end of this decade, Africa will have 128 million households with an expected discretionary spending power of $1.4 trillion.

As the single largest and most advanced economy on the continent, South Africa should be well positioned to capitalise on these trends and provide a conduit for international investors eager to do business with Africa.

But, trade is hampered by arduous regulations and an unfocussed trade strategy. According to the World Bank's Doing Business report, our country ranks 144 out of 148 countries surveyed for ‘trading across borders'. 

Five-year projections of the total value of investment into Africa puts South Africa in fourth place, at $10 billion, compared to Nigeria, in first place, which is expected to receive $23 billion. 

We seem to be poised to squander our window of opportunity. 

The DA has a turnaround strategy to enhance South Africa's trade position and its attractiveness as an investment destination. 

To enhance trade, a DA government would: 

• Introduce one-stop border posts to expedite border crossings and reduce administrative burdens and costs;
• Streamline import and export procedures to reduce the time it takes to import and export from over 3 weeks to between 7 and 8 days;
• Expedite the customs clearance process by introducing an electronic data interchange system;
• Promote regional government partnerships based on the successful Western Cape model;
• Establish a South African National Peace Corps to provide development assistance and build closer ties between South Africa and the rest of the continent;
• Negotiate for a SADC-wide tourist visa; and
• Establish a South African International Development Agency within the Department of International Relations and Cooperation that will provide development loans and assistance, policy expertise and other technical support to developing countries.

To encourage FDI, a DA government would: 

• Enhance South Africa's strategic economic diplomacy;
• Ensure that South Africa's ambassadors and high commissioners are fully equipped to promote the country's economic interests abroad by establishing up-to-date training and selection criteria;
• Eliminate out-dated apartheid era exchange controls; and
• Reduce the corporate tax rate to make it cheaper and easier to start and run successful enterprises in South Africa.

From 2009 to June 2012, the Western Cape attracted 80 international FDI projects, with a total value of R30.1 billion, creating 6 906 jobs. This success story is largely attributed to the province's effective regional trade promotion and the efforts of the Western Cape government to make it easy to do business in the region. There is no reason why these successes cannot be replicated across South Africa. 

In our current position, South Africa is facing the reality of losing its status as the ‘gateway to Africa'. We need decisive trade and investment policies now to ensure that we are not left behind by more policy-savvy economic growth nodes.  The proposals outlined in the DA's "Open for Business" document offer a viable solution that promises to usher in a new era of trade and investment verve.

Issued by the DA, August 20 2012

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