News Archive November 2015

tralac’s Daily News selection: 30 November 2015

The selection: Monday, 30 November

Rail infrastructure in Africa: financing policy options (AfDB)

Except for South Africa and North Africa, railways are not making a dent on African economies. Market share is less than 20%. Railway transport expected to play a major role in complementing other transport modes of transport to support and sustain anticipated growth. With the anticipated growth, railways will be well positioned to contribute to low transportation costs, efficient use of energy, slowing down climate change, and job creation. How to accelerate the rail expansion? An in depth assessment of the railways in eight African countries has been undertaken. These eight countries are: Botswana, Cameroon, Kenya, Madagascar, Morocco, Senegal, Tanzania and Zambia. They represent a wide range of backgrounds and experiences. Most have had experience with concessions, with different results. But some (like Botswana and Morocco) have maintained a public sector approach. The most relevant conclusions from these visits are:

Transport Forum 2015 updates: Transport in Africa viewed through the lens of fragility, African cities need to push for green, inclusive transport

Kenya: Why the standard gauge railway is not cost-effective (Business Daily)

Mozambique invites bids for next phase of northern export harbour (Bloomberg)

AU in meetings to progress intra African trade (AU)

In this respect, from 23-27 November, the AU co-hosted three meetings aimed at enhancing trade among African countries: i.e. discussing progress in regional integration, specifically the moves towards establishing a Continental Free Trade Area: modalities for trade in services negotiations and review of the implementation of the plan of action for Boosting Intra African Trade (BIAT). Meeting in Cape Town were different departments of the African Union Commission, including the Directorate of Information and Communication, some member states, Regional Economic Communities and partners, under the joint coordination of the AUC’s Department of Trade and Industry and the Trade Law Centre, based in South Africa.

Transaction dollarisation in Tanzania (Bank of Tanzania)

The findings indicate that about 3.2% of the businesses in Mainland Tanzania and 4.5% in Zanzibar quote prices in US dollar, but most of these businesses were willing to accept payments in Tanzanian shilling. Only 0.1% of the businesses in the Mainland and none in Zanzibar indicated that they would prefer payments exclusively in US dollar. Many countries in the region and across the world are experiencing a similar situation. We urge the authorities to avoid the use of direct measures in their quest for limiting dollarization in the economy because international evidence suggests that enforcing de-dollarization can potentially be counter-productive. Instead, we recommend the use of gradual market-oriented measures aimed at enhancing the attractiveness of the domestic currency.

Zimbabwe: Unpacking depreciation of the Rand (The Zimbabwe Daily)

The same applies to diaspora remittances particularly from South Africa. The same illustration applies. For instance, if a Zimbabwean resident in South Africa was sending home say R13 000 in 2011, he/she would have sent an equivalent of $2 000. Today, the same R13 000 is now worth just below $897. From this analysis, we will certainly see our remittances especially from South Africa going down in real terms. This is a real concern for Zimbabwe in the face of the use of the multiple currencies with the US dollar being the “official currency”. [The author: Gift Mugano]

PSF, EALA exchange friendly fire over EAC laws (New Times)

The Chairman of the East African Business Council, Dennis Karera, challenged the regional legislative body to get tough on the subject of Non Tariff Barriers. “You clear four NTBs today, three are created next week, we need to get to work by walking the talk,” he said. Karera also called for stronger laws to protect the region’s nascent industries from cheaper imports from outside East Africa. “Cheap imports of garments from China have killed the region’s formerly booming textile industry, we need to get more protective and tougher regarding rules of origin,” Karera added. Karera also revealed that some partner states are using standards as a tool to fight competition within the region, this he said should be dealt with by EALA.

Regional assembly decries failure by leaders to assent to Bills (The East African)

Uganda: Government to borrow Shs672b to stabilise the Shilling (Daily Monitor)

Government wants to borrow $200m (Shs672bn) from the Eastern and Southern African Trade and Development Bank to “stabilise the exchange rate”. The money will be used to skirt around the need to go to Bank of Uganda for US dollars for some imports. Shs672bn is 2.8% of the 2015/16 Fiscal Year budget or 6.7% of Uganda’s current foreign exchange reserves.

Mozambique's metical drops 21% in a week on economy fears (Reuters)

ECOWAS businessmen seek court on trade disputes (Vanguard)

At a two day public-private sector dialogue on Nigeria/ECOWAS trade litigation group organized by the Association of Nigerian Traders in collaboration with the EU and German International Cooperation meeting, it was agreed that stakeholders should advocate the amendment of the ECOWAS Treaty to allow for supra-ntionality of the body as obtained in the UEMOA system. According to a communiqué issued after the meeting and signed by Ken UKAOHA, Esq, Secretariat President, National Association of Nigerian Traders, the body agreed that similarly, advocacy should be geared towards persuading member states to domesticate ECOWAS instruments in countries where domestication applies.

Setback at WTO as demand to continue talks on Doha set aside (Livemint)

India, along with an overwhelming majority of developing and poorest countries, received the biggest shock yet after a panel of facilitators at the World Trade Organization set aside their demand for reaffirming the commitment to continue negotiations on all outstanding issues of the Doha Development Agenda in the declaration to be adopted at the coming Nairobi ministerial meeting. On Friday, the panel of facilitators said its report “contains neither draft language on nor place holders for the most contentious issues identified by members, namely the reaffirmation of the DDA and instructions on the way forward, and no new issues”. Following the facilitators’ report, major industrialized countries - the US, EU, Japan, Australia and Canada, among others - insisted at a closed-door meeting on Saturday that if developing countries like China, India, Brazil, South Africa and Indonesia want reaffirmation of DDA negotiations, then they must accept “graduation” and forego special and differential and less-than-full-reciprocity flexibilities, according to people familiar with the development.

Nairobi Ministerial Declaration: consolidated draft by the facilitators (WTO)

Selected FOCAC trade-related updates, commentaries:

Africa and China: More FDI needed to boost exchange (UNECA)

China is Africa’s first trade partner but ranks behind the United States, European countries and India when it comes to Foreign Direct Investment in Africa, said ECA Executive Secretary Carlos Lopes Thursday 26 November in Marrakesh at the 2015 Sino-African Entrepreneurs Summit. According to Mr Lopes, less than 1% of the FDI China has invested across the world was put in Africa, and although the China-Africa partnership has had a good start it is still far from its potential: “To reach the next step, this partnership needs to rely on much more direct investment”, he added.

SA’s exports to China boosted (IOL)

“Both countries agreed that China would increase its sourcing of value added products from South Africa in order to improve the structure of trade between the two countries, which is mainly dominated by exports of raw materials from South Africa to China, and imports of value added products from China by South Africa,” said the dti. Strachan said South Africa was concerned about the skewed imports and exports pattern between the two countries that are in favour of the Chinese as over 85% of South Africa’s exports to China comprise raw materials. “This is a troubling characteristic of our trade given that a Comprehensive Strategic Partnership Agreement has been in implementation for 5 years and has not yet achieved one of its main objectives,” said Strachan. “It is also concerning in that South Africa and China refer to each other as the developing partners of the 21 century, yet continue to reinforce problematic trade behaviours of the past.”

Commentary by Dr Liu Xianfa, China's Ambassador to Kenya (CapitalFM)

In the first half of this year, 20% of Africa’s economic growth came from China. It is estimated that in the next five years, China will import US$ 10 trillion of goods and invest over US$ 500bn overseas, and outbound visits made by Chinese people will exceed 500 million. This will bring enormous business opportunities to the world, African countries included.

Africa to focus on China debt at Joburg summit as commodities slump (Reuters)

China clears way for Silk Road into Africa - and it takes the form of key summit with African leaders (M&G Africa)

China's relationship with Africa is way overblown (Global Post)

Learning from China is critical for Africa’s success (IOL)

The West and Central African trade profile: with a special review of the relationship with China and regional agricultural trade (tralac)

President Xi Jinping: Let the Sino-Zim flower bloom with new splendour (The Herald)

Ross Anthony, Yejoo Kim: Chinese industrialisation in Africa (IOL)

ACP Council of Ministers: outcomes

The ACP Council of Ministers concluded its 102nd session on 25th November 2015 with a renewed commitment to ensuring the success of the upcoming 8th Summit of ACP Heads of State and Government in 2016, which will be a pivotal point for the organisation, as it undergoes a review and reorientation process to position itself as a more effective global player. Along with the endorsing of the preparations for the 8th Summit, the ACP Council of Ministers passed 13 decisions, four resolutions and two declarations on other key matters, including the following: [Download: Ambassadorial Working Group report]

Magdy Martínez-Solimán: statement at UNIDO 2015 LDC Ministerial Conference (UNDP)

COMESA-UNAIDS in pact to promote local production of pharmaceuticals (COMESA)

The United Nations Programme on HIV/AIDS (UNAIDS) and COMESA Secretariat have formed a partnership that will enable the latter to develop a pharmaceutical production strategy. The strategy is intended to harmonize the production of medicines and related products in the region. The partnership entails among others, technical and financial assistance to COMESA in crafting and adopting the strategy. Currently, COMESA is working on a co-operation framework among member States in the manufacturing of essential drugs and an amendment of the Trade Related Intellectual Property Rights (TRIPS) Agreement on compulsory licensing for medicine. [Reminder: Pharmaceutical Manufacturing Plan for Africa, Building partnerships for sustainable capacity development on medicines regulation in Africa]

Financing health care in Africa: CABRI conference background papers

Ireland: Minister Coveney to lead trade mission to Africa (RTE)

Irish Minister for Agriculture Simon Coveney will lead a five-day trade mission to West Africa this week. The trip, which officials have described as the largest trade mission to the area in two decades, aims to improve economic links with Nigeria and Ghana in particular. Ahead of the trip, Minister Coveney said Ireland is "strategically placed" to be a key supplier to West Africa.

Nigeria: Cargo tracking note and the anxiety at the ports (ThisDay)

Kenya: Importers warn over high cost of goods under new inspection rule (Business Daily)

EALA urges fair climate deal at Paris conference (New Times)

SADC ministers agree to clamp down on social media (Zimbabwe Mail)

SADC senior legal meeting fails to form quorum (Mmegi)

EU to support Mozambique with US$779m until 2020 (Club of Mozambique)

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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to over 300 recipients across Africa and internationally, serving in the AU, RECS, national government trade departments and research and development agencies. Your feedback is most welcome. Any suggestions that our recipients might have of items for inclusion are most welcome. Richard Humphries (Email: This email address is being protected from spambots. You need JavaScript enabled to view it.; Twitter: @richardhumphri1)

Surge in climate change-related disasters poses growing threat to food security

In developing countries the agriculture sector bears much of the economic impact

Droughts, floods, storms and other disasters triggered by climate change have risen in frequency and severity over the last three decades, increasing the damage caused to the agricultural sectors of many developing countries and putting them at risk of growing food insecurity, FAO warned in a new report released on 26 November ahead of the United Nations Climate Change Conference (COP 21) in Paris.

Worldwide, between 2003 and 2013 – the period analyzed in the study – the average annual number of disasters caused by all types of natural hazards, including climate-related events, almost doubled since the 1980s. The total economic damage caused is estimated at $1.5 trillion.

Focusing specifically on the impact of climate-related disasters in developing countries, some 25 percent of the negative economic impacts were borne by the crop, livestock, fisheries and forestry sectors alone. In the case of drought, over 80 percent of the damage and losses affected the agriculture sector, especially livestock and crop production.

The FAO report is based on a review of 78 on the ground post-disaster needs-assessments conducted in developing countries coupled with statistical analyses of production losses, changes in trade flows and agriculture sector growth associated with 140 medium and large scale disasters – defined as those affecting at least 250,000 people.

The report clearly demonstrates that natural hazards – particularly extreme weather events – regularly impact heavily on agriculture and hamper the eradication of hunger, poverty and the achievement of sustainable development.

The situation is likely to worsen unless measures are taken to strengthen the resilience of the agriculture sector and increase investments to boost food security and productivity and also curb the harmful effects of climate change.

"This year alone, small-scale farmers, fisherfolk, pastoralists and foresters – from Myanmar to Guatemala and from Vanuatu to Malawi – have seen their livelihoods eroded or erased by cyclones, droughts, floods and earthquakes," said FAO Director-General José Graziano da Silva.

He noted how the international community recently committed itself to achieving the Sustainable Development Goals and the Sendai Framework for Disaster Risk Reduction 2015-2030 and is expected to reach a climate change agreement at the COP 21. Measuring progress made in meeting these global targets will require accurate, up-to-date information, including on the impact of disasters, Graziano da Silva stressed. 

"National strategies for disaster risk reduction and climate change adaptation that support resilience must address the types of disasters with the greatest impact on the agriculture sector, the FAO Director-General said. He noted how sector-specific data on damage and losses are essential for effective policy and practice," and that the FAO study aims to contribute to national, regional and global efforts to develop comprehensive disaster data collection and monitoring systems.

Drought critical in sub-Saharan Africa, flooding and storms are a scourge in Asia

Drought has an especially detrimental impact – around 90 percent of production losses – on agriculture in sub-Saharan Africa where the sector on average contributes to a quarter of GDP, rising to a half when agribusiness is included. At a conservative estimate, total crop and livestock production losses after major droughts were equivalent to more than $30 billion between 1991 and 2013 in the region.

Drought often has a major cascading effect on national economies as shown in Kenya where between 2008 and 2011 it caused significant losses in the food processing industry, particularly grain milling and coffee and tea processing.

Many Asian countries are particularly vulnerable to the impact of floods and storms. For example, crop production losses caused by the 2010 floods in Pakistan directly affected cotton ginning, rice processing and flour and sugar milling, while cotton and rice imports surged. In this case, some 50 percent of the $10 billion in total damages and losses fell on the agriculture sector.

Different disasters require different responses

Understanding the impact of different types of disasters is crucial to ensure that the most appropriate policies and practices are implemented.

Floods cause more than half of the total damage and loss to crops which are also very vulnerable to storms and drought. Around 85 percent of the damage caused to livestock is due to drought, while fisheries are overwhelmingly affected by tsunamis and storms such as hurricanes and cyclones. Most of the negative economic impact to forestry is caused by storms and floods.

Beyond production losses, the study shows how disasters can cause unemployment and erode incomes especially for small scale family farmers, thus threatening rural livelihoods. For instance, the 2010 floods in Pakistan affected 4.5 million workers, two-thirds of whom were employed in agriculture and over 70 percent of farmers lost more than half of their expected income.

Directing more investments towards resilient and sustainable agriculture

Worldwide, the livelihoods of 2.5 billion people depend on agriculture, yet only 4.2 percent of total official development assistance was spent on agriculture between 2003 and 2012 – less than half the United Nations target of 10 percent. Investment in disaster risk reduction is extremely low: only around 0.4 percent of official development aid in 2010 and 2011.

FAO stresses that aid should better reflect the impact of disasters on the agriculture sector.

Investments into disaster response and recovery should also build resilience to future shocks through risk reduction and management measures, particularly in countries facing recurrent disasters and where agriculture is a critical source of livelihoods, food and nutrition security, as well as a key driver of the economy.

“We cannot abandon hope,” the driver behind talks on a new climate regime

Starting this week, France will host a major international negotiation that aims to clinch a universal climate agreement set to come into force at the end of the decade, replacing current multilateral emissions-cutting arrangements. Delegates from over 200 nations carry a hefty weight of global expectations to streamline a complex 54-page bracketed draft document into a coherent climate regime, with the current mood recollective of the forceful words of the late sustainable development visionary Maurice Strong (1929-2015), a pioneer behind today’s intergovernmental environment processes.

The Twenty-first Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC COP21), as these talks are formally known, will be buoyed at the outset by the presence in Paris of more than 130 heads of state providing “political impetus” for the negotiations. Regular business will then continue in several formal negotiating tracks including the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP) – the body charged with developing the new deal – and technical, ongoing work under other UNFCCC bodies.

According to a provisional agenda, work under the Subsidiary Body for Scientific and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI) should conclude by Friday 4 December, and the ADP should wrap up the following day with a revised version of the draft regime to present to the COP plenary. Heads of delegation will then resolve any outstanding issues before all negotiations close on Wednesday 9 December to allow time for the UN formalities of adopting a new agreement.

For seasoned climate talks watchers, the schedule is very tight, with many expecting difficult negotiations. Several stakeholders nevertheless remain optimistic an outcome will be reached, despite the spectre of a failed attempt to clinch a global climate deal in 2009 in Copenhagen, Denmark. Some observers question, however, whether the eventual pact will be effective, substantive, and workable.

The Paris effort will be closely followed by the wider international community not only given the existential threat posed by climate change, but also in light of the outcome’s potential systemic importance for many other policy areas from development to global economic governance. The global economy is hard-wired to fossil fuels, which make up 80 percent of the world’s energy mix, driving planetary warming greenhouse gas emissions. A shift towards a low carbon future will affect current ways of production and consumption. It will also substantively redefine the shape of trade and investment flows and the frameworks that serve as a key linchpin of the global economy.

Operationalising a new approach

In Durban, South Africa four years ago, UNFCCC parties agreed to forge by 2015 a new international deal to mitigate climate change with legal force applicable to all. The decision implied a break from the current Kyoto Protocol that mandates emissions cuts from so-called Annex I developed countries only as identified by the 1992 Convention.

Since then, countries have been grappling with the implications of this shift for international climate cooperation, as well as the new governance provisions it requires. In a move broadly welcomed by climate watchers, at press time over 180 nations responsible for around 96 percent of global emissions have outlined an “intended nationally determined contribution” (INDC), representing the individual self-defined domestic climate action plans that will serve as the building blocks of the new regime.

For some in the climate community the INDC approach represents a master stroke to usher in a new deal with expansive coverage – formerly unimaginable in UNFCCC corridors, given that the Kyoto Protocol covers just 14 percent of aggregate emissions and zero percent of emissions growth – and allows economies to focus climate obligations on areas where they are most willing to act.

Other stakeholders, however, have questioned the deal’s long-term effectiveness and say that a review process will be critical. A UNFCCC secretariat synthesis assessment of the INDCs – which mostly target the 2020-2030 period and in some areas are conditional on international support – finds that if implemented properly these measures will help slow emissions growth. They do not, however, do enough to keep the world below a two degrees Celsius warming from pre-industrial levels.

For many negotiating parties the new approach has also spawned tensions. For example, working out how to apply the principle of “common but differentiated responsibilities and respective capabilities” (CBDR-RC) – which acknowledges the different responsibility and capacity countries have for climate action – across the new regime has been slated as a key area to navigate in Paris, with implications for mitigation, review, climate finance, and technology transfer, among many other areas.

Draft text

The draft document outlined by parties for the ADP talks in Paris – the result of over 18 months of refining – contains both a draft agreement and implementing decisions, including scaling up action before the end of the decade. The draft document covers all manner of potential details relevant to the functioning of the new regime, including its purpose, long-term goal, management of individual climate mitigation efforts, adaptation and loss and damage, climate finance, climate technologies, and other supportive arrangements.

However, numerous proposals and options are suggested for each area, pointing to some key divisions parties must bridge in Paris. For example, on the ever-difficult issue of financing to enable both emissions mitigation as well as adaptation to climate change some parties support language that would see all nations in a position to do so mobilise funds, but others expect commitments from just developed nations. While developed countries have pledged to scale up climate finance to US$100 billion a year by 2020, the G77 and China have warned that an effective climate deal hinges on increased finance arrangements beyond the end of the decade.

Several proposals are included for reviewing and monitoring the INDCs, along with provisions on transparency, global stocktaking, and facilitating implementation and compliance. Some parties also support adopting various long-term goals such as a peaking of emissions, or an overall decarbonisation of the economy by the end of the century. Consensus around many of these areas is, however, not a done deal heading into the talks.

An informal ministerial held in Paris from 8-10 November garnered wide-ranging support – according to an “aide-mémoire” prepared by the French COP21 presidency – for a “single system, with flexibilities depending on capabilities,” referring to the new regime. Developed countries will likely continue leading on mitigation, through absolute economy-wide targets via the INDCs, although all nations should regularly present mitigation commitments with no backtracking over time.

Among other things, ministers converged on the need to regularly review mitigation efforts in five-yearly cycles, in a way that is facilitative and non-punitive. Ministers also confirmed that the Paris deal should provide economic signals to shift investment flows at large, whether through green bonds, fiscal incentives, or carbon pricing. The extent to which this informal political progress will shape details emerging from the technical negotiations, however, remains to be seen.

Questions around the final deal’s legal nature were voiced ahead of Paris, as US Secretary of State John Kerry insisted that the outcome will not be a “treaty,” while others argued that this is required by the Durban mandate. According to The Financial Times, France has now bowed to the US on the broad outcome, but has signalled that some of the clauses will be legally binding.

Trade issues to look out for

Under one option in the draft agreement’s finance section, parties would abide by principles of fiscal sovereignty and avoid disguised distortions to trade in mobilising climate funds. The mitigation section in the draft agreement also suggests that countries would not resort to any “unilateral measures” against goods and services from developing countries on the grounds of climate change. The same section alludes to the importance of giving full consideration to the specific needs and concerns of developing countries resulting from the implementation of “response measures,” in other words, mitigation actions.

Some parties support establishing an instrument to enhance action in this area, elaborated in the draft decision under an option for a cooperative mechanism on response measures, set up at some future date and building on existing work. The mechanism would recommend specific tools, actions, and programmes to address response measures' impacts and implementation gaps in order to minimise adverse effects on developing countries. The approach has drawn strong resistance by others. The decision paragraph adds that any measures should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction to international trade.

Specific questions surrounding work on minimising adverse economic, social, and environmental impacts from the implementation of response measures and addressing the needs of developing countries have proved complex in the UNFCCC context over the years. The topic is not linked exclusively to trade, although parties have pledged to promote an open international economic system supportive of sustainable growth all the while responding to climate change.

Under the SBI and SBSTA tracks, parties have repeatedly clashed over how to take forward the work of a forum on response measures whose two-year mandate expired in 2013, but recently agreed in June to forward a bracketed draft decision on a forum and work programme for consideration in Paris. How this relates to the discussions under the ADP needs to be clarified.  

Multilateral arrangements on carbon markets are among the other areas relevant to trade policy and are also subject to political ping-pong between the ADP and technical tracks. Long-running talks under SBSTA on a framework for various approaches (FVA) – a way of coordinating market and non-market based mitigation actions that relate to commitments under the UNFCCC – a new market based mechanism (NMM), complemented by non-market based approaches (NMA) saw some exchange in June on accounting frameworks, among other areas, but failed to secure draft conclusions.

In theory, these talks could set common rules for climate mitigation efforts with international scope, such as international emissions trading. However, parties continue to disagree on the mandate for the talks, the relationship between this SBSTA work and proposals on markets that have been suggested for the Paris deal, and ideological resistance by some to the use of market-based mechanisms for climate action.

In the Paris draft agreement and decisions, some parties have submitted options relating to international emissions trading, including avoiding double counting, ensuring that any abatement outcomes are “real, permanent, additional, and verified,” and as part of a “mechanism to support sustainable development” in various incarnations. The agreement’s preamble, meanwhile, could acknowledge that carbon pricing is an important approach for cost-effective emissions cuts. Mark Carney, Governor of the Bank of England and Chairman of the G20's Financial Stability Board, has suggested such language in the Paris deal might prompt governments to provide further guidance to markets on possible carbon pricing efforts.

After being dropped from earlier versions of the document, the draft agreement’s mitigation section now includes a reference to reducing emissions from international aviation and shipping, through the respective UN agencies responsible for these sectors.

Boosting the global deployment of climate technologies for mitigation and adaptation will also be a critical part of addressing the climate challenge. The draft agreement contains an article, supported by corresponding decision elements, on technology development and transfer including a possible UNFCCC global goal in this area, enhanced communication on implementing commitments, a new technology framework, and strengthening the existing Technology Mechanism.

SA’s exports to China boosted

South Africa’s exports to China received a boost with the signing of more than 20 co-operation agreements and contracts to the value of $918 million, the Department of Trade and Industry (dti) said on Monday.

These agreements and contracts were signed during the China Inward Buying Mission event that took place in Sandton, Johannesburg, ahead of the Forum on China-Africa Co-operation (Focac).

“More than 16 South African companies signed these purchase and investment agreements with the Chinese companies,” the dti said in a statement.

The Inward Buying Mission forms part of the implementation of the Comprehensive Strategic Partnership Agreement (CSPA) signed between South Africa and China.

“Both countries agreed that China would increase its sourcing of value added products from South Africa in order to improve the structure of trade between the two countries, which is mainly dominated by exports of raw materials from South Africa to China, and imports of value added products from China by South Africa,” said the dti.

Speaking at the event, dti Deputy Director-General Garth Strachan said the Inward Buying Mission served as a symbol of incremental progression as the governments of the two countries had been planning to hold an event of this nature for some time.

“Within this (CSPA) agreement, China has also committed to (1) encourage its enterprises to increase investment in South Africa’s manufacturing industry and promoting the creation of value-adding activities; (2) explore co-operation opportunities in infrastructure projects such as roads, railways, ports, power generation, and airports,” said Strachan.

“Most importantly, China has agreed to (3) increase its source of value added products from South Africa. Let me emphasise that this inward buying mission is part of the implementation of the third pillar of the CSPA.”

Strachan said South Africa was concerned about the skewed imports and exports pattern between the two countries that are in favour of the Chinese as over 85 percent of South Africa’s exports to China comprise raw materials.

“This is a troubling characteristic of our trade given that a Comprehensive Strategic Partnership Agreement (CSPA) has been in implementation for 5 years and has not yet achieved one of its main objectives,” said Strachan.

“It is also concerning in that South Africa and China refer to each other as the developing partners of the 21 century, yet continue to reinforce problematic trade behaviours of the past.”

Strachan said that South Africa would like to see a reduction in the dominance of raw materials in its export basket to China.

“We call on the Chinese government and Chinese private sector to collaborate and send more value added orientated inward buying missions to South Africa,” said Strachan.

“We believe that this action will fast-track the industrialisation of our economy and contribute to successful long-term industrialisation and developmental plans.”

Strachan also said that in any healthy economy, the manufacturing sector was a key driver towards accelerating growth.

The South African government has key policies to further develop and support the manufacturing sector in order to ensure its sustainability.

Strachan said the government plans to expand the current supply measures to attract downstream value adding manufactures.

“In this regard, we have developed plans to increase the level of beneficiation in the following areas: iron ore and steel; platinum group metals; polymers; titanium; upstream mining inputs and the energy value chain,” said the deputy director general.

“This development will require major foreign direct investment in the identified priority areas. We welcome China’s participation in the development of these priority sectors which we have identified for beneficiation as well as investment in all the other areas of manufacturing.”

Strachan said the signing of the co-operation agreements and contracts was in line with Focac, which will be held in Johannesburg later this week. It is the first time Focac is being held on the African continent.