Davies: Africa needs industrialisation for continued growthPosted on Friday, June 22nd, 2012 by Steyn, Lisa (Mail & Guardian Online) in News
Africa is the next growth frontier but industrialisation and regional economic diversification is vital to ensure its growth spurt can be sustained.
With the aim of fostering further trade co-operation between South Africa and Switzerland, Trade and Industry Minister Rob Davies explained this on Thursday in a speech delivered at SwissMem’s (a representative organisation for the machinery, electrical and metal industries) annual conference in Zurich.
He also met with federal councillor and head of the Swiss federal department of economic affairs Johann Schneider-Ammann.
“Africa is on the move,” Davies said, but “we need to turn this growth spurt into a sustained development effort and the route is by industrialisation.”
He said South Africa’s future was inextricably linked with that of the continent.
South Africa is Switzerland’s main trading partner in Africa and is viewed as the gateway to the continent. While Swiss exports to South African shores remain modest, South African exports to Switzerland have experienced a 75% increase over recent years and is now South Africa’s eighth largest export market.
“Our industry needs the global markets, however, they are constantly changing,” said Hans Hess, president of Swissmem.
He said globalisation was a trend which could not be stopped and that was why countries like Switzerland must utilise and leverage the opportunities which come with it.
While the Swiss have a wealth of experience in establishing footholds in new markets, too many financial barriers pose a challenge and impact trade in emerging markets.
Given restrictive World Trade Organisation regulations and bilateral agreements have become important.
“Emerging markets also want to expand into Switzerland,” Hess said
“So this is a two-way free trade agreement.”
Davies said the free trade agreement between the European Free Trade Association and the Southern African Customs Union (Sacu) had led to a steady increase in trade between the two.
What is necessary now is regional integration. “[It] will give us the basis we think to increase the chain of value-added activities.”
The newest priority is a large regional market, known as the tripartite free trade area, which would cut across several regional economic communities. It would consist of 27 countries “from Cape to Cairo” along the east coast of Africa and would have a combined gross domestic product of $1.3-trillion.
A preliminary date of launch has been set for 2013.
“If we succeed in putting this in place … we will create the kind of base that will allow for economic diversification,” Davies said.
Earlier on Thursday, at a press conference in Bern, Schneider-Ammann said his meeting with Davies touched on the free trade agreement with Sacu and the possibility of initiating a liberalisation of processes, particularly looking at industry and agriculture.
Davies said a mid-term review of the Sacu free trade agreement would be due soon and South Africa would look at challenges.
Competition from emerging markets is an added incentive to strengthen trade relations, Hess said. “We have to learn how to compete with these companies from these markets.” But it’s a “win-win” situation as Switzerland also offers attractive technologies to emerging markets which can help them overcome very fundamental infrastructure challenges.
Inadequate infrastructure remains a problem but Davies noted new programmes from government with an allocation of R860-billion for infrastructure development up until March 2014, would address some of these issues and undoubtedly have a favourable effect on trade.