CONGO 2011 International Trade Initiative. DRC delagate briefing

Transcription

1 CONGO 211 International Trade Initiative DRC delagate briefing

2 Contents Section 1: Overview 1 Section 2: South Africa DRC relations 2 Section 3: South Africa as an investment and trade partner 2 Section 4: South Africa a nation DRC can do business with 3 For Further Information 9

3 Section 1: Overview The Department of Trade and Industry s (the dti) current International Trade and Investment Initiative (ITI) to Lubumbashi in the Democratic Republic of Congo is the second such visit to the DRC. This initiative forms part of the dti s Export and Investment Promotion Strategy focusing on high growth export markets. The objectives of this ITI are to create export opportunities for South African exporters to the DRC and deepen their market penetration. The DRC is the largest country in Central Africa, with a population of 68 million people. It is strategically located at the centre of Africa and has great growth potential, based on its vast natural resources including great mineral wealth and the world s second biggest rainforest. The sectors targeted for this ITI are: Capital equipment (mining equipment) Agriculture and agro-processing Construction Infrastructure Energy South Africa recognises that partnerships with various countries are critical to the sustainable economic development of our country. South Africa has taken a strategic decision to partner with the DRC during its reconstruction and development phase. A combination of private sector investment and the development of infrastructure (such as transport networks) is needed in many African countries to unlock their growth potential in sectors such as mining, agriculture, power generation and tourism. Development corridors and other spatial development initiatives will serve to stimulate foreign direct investment and fast-track intra-africa trade and development DRC presents a variety of opportunities for South African companies. Agriculture accounts for about 4% of the DRC s GDP and absorbs more than 75% of the labour force. Agricultural output is expected to increase as producers and traders continue to recover from the impact of the civil war. Investment in infrastructure, particularly in the transport network, will assist the agricultural sector by improving access to markets. The main sources of growth will be the construction, telecommunications and mining sectors, all of which are benefiting from increasing foreign investment. According to the BCC, foreign direct investment in the DRC amounted to US$1.8bn in 27. In the short-term telecommunications investment is likely to outstrip construction, which has been more sensitive to the adverse international and domestic economic environment. Section 2: South Africa DRC Relations The DRC has made remarkable progress and presents real opportunities for intraregional economic co-operation, foreign direct investment (FDI) and sustained growth and development. South Africa is committed to continued engagement with the DRC and assisting in the restructuring of their economy. The Presidential Binational Commission (BNC) between South Africa and the DRC, set up in 24, provides a legal and administrative framework to manage collaboration on numerous post-conflict reconstruction and development projects in the DRC. South Africa has partnered with the DRC with regard to funding for major infrastructure projects including the construction of a new terminal at Kinshasa s N Djili International Airport and a deepsea port at Banana on the Atlantic coast. In addition, South Africa is leading the rehabilitation and modernisation of the Inga Hydro-electric Dam, one of the biggest projects to be implemented under the New Partnership for Africa s Development (Nepad). South Africa s assistance to the DRC is broadly based on five specific priority areas health, education, water, sanitation and infrastructure. Section 3: South Africa as a trade and investment partner In the last six months, South Africa has reaffirmed its focus on enhancing trade and investment, regional integration and promoting the wider African agenda through sustainable development and trade investment. South Africa is looking to fellow African countries, such as the DRC, as well as high-growth developing nations to join it in trade partnerships. The 21 Africa report from global consultancy McKinsey, titled Lions on the move: The progress and potential of African economies highlights reasons for Africa s growth acceleration emerging business opportunities. The report found that Africa s collective GDP stood at US$1.6 trillion in 28 about the same as Brazil s or Russia s, which puts the continent amongst the world s fastest growing economic regions. Natural resources contributed directly to just 24% of GDP growth between 2 and 28 the rest came from sectors such as telecommunications, retail, transport, and manufacturing. Relevant to this ITI is that Africa s production of oil, gas, and most minerals, in terms of volume, is expected to grow by 2% to 4% per year and that agricultural output could increase from $28-billion per year to $5-billion in 22, and $88-billion in 23. What this emphases is that South Africa as an integral part of Africa, needs to grow Africa through trade and investment partnerships. The addition of South Africa to the BRIC group of countries will assist in making this the one of the most significant economic groupings in the next decade, adding the strength of Africa s leading economy on the African continent. 1 2

4 Africa, as a continent, remains largely untapped in relation to the world s developed economies. Development in recent years through trade partnerships with the world s emerging economies has lifted millions of people from subsistence living and into meaningful contributors to their country s powerful emerging economy. It is groupings like BRICS that will see this grow even further. The acceptance into BRICS not only develops emerging economies by advancing the restructuring of global political, economic and financial architecture into one that is more equitable, but is balanced and rests on the important pillar of multilateralism. In a 21 report before South Africa s acceptance into the BRICS grouping, Goldman Sachs anticipated that, as an aggregate, BRIC will overtake the United State s economy by 218 and by 22 BRIC members will have larger economies than Spain, Canada and Italy. Factoring in South Africa s contribution to the group and the economic forecast changes the outcome dramatically for the better. Its upper-middle income ranking by the World Bank makes South Africa a dynamic, systematically important, emerging market investment destination of choice to the rest of the world. It offers affordability, availability of capital, financial market sophistication, good business tax rates, infrastructure and a GDP of billion USD (29 figure), the highest in Africa. Section 4: South Africa a nation DRC can do business with South Africa: The number one investor on the African continent South Africa is a nation of diversity, with some 5-million people and a wide variety of cultures, languages and religious beliefs. The total 21 population was estimated at , of which Africans, at 79.4% of the total, are in the majority. White people make up 9.2% of the population; coloured people 8.8%, and people of Indian or broader Asian descent 2.6%. South Africa is a multilingual country, with 11 official languages. These include the European languages of English and Afrikaans (a language derived from Dutch), and nine African languages. The most widely spoke home language is isizulu, but the language of business is English, which is widely spoken as a second language. Government and legal system South Africa has been a constitutional democracy since 1994, when the country held its first fully inclusive, non-racial democratic election. This ended four decades of apartheid, during which only white people were allowed to vote. The country s constitution is the ultimate authority in the land and entrenches a Bill of Rights widely believed to be one of the most enlightened in the world. At the national level, legislative authority is vested in a two-chamber Parliament situated in Cape Town. Elections are held every five years and parliamentarians are elected via a system of proportional representation. Judicial authority is based on the courts, which range in from the Constitutional Court and the Supreme Court of Appeal, to the high courts and magistrates courts. The State President, the Deputy President, and a cabinet comprising the Ministers who head the various national government departments exercise executive authority, the hands-on business of government. Several Ministers are assisted by Deputy Ministers. The executive arm of government is based in Pretoria, the national capital. At the provincial level, each of the nine provinces has a legislature that sits in the provincial capital. Legislatures vary in size according to the population of the province. Each province also has a Premier, who heads the executive arm of government and is assisted by members of the executive council, who take responsibility for various portfolios and head provincial departments. Responsibility for the delivery of several important services such as health and education is located at provincial level. Power is further devolved to local government, which takes the form of metropolitan councils in the major cities and district councils in other towns and rural areas. The metro and district councils are subdivided into smaller municipal entities. South Africa economic indicators While South Africa s growth trajectory has been impacted by the global financial crisis, the economy emerged in 21 with a growth rate in line with global recovery f 211f Real GDP growth (%) Inflation Rate (%) Current Account Balance (% of GDP) GDP by sector (%) 21 Agriculture Industry Services Real GDP growth (%) f 211f Inflation Rate (%) f 211f In South Africa, government authority is separated into three spheres legislative, executive and judicial and government into three tiers national, provincial and local Current Account Balance (% of GDP) GDP by sector (%) f 211f 3 4 Agriculture Industry Services

5 f 211f Real GDP growth (%) Inflation Rate (%) Current Account Balance (% of GDP) SOUTH AFRICA DRC TRADE LINKS Top 1 South African Exports to the DRC (21) EXPORT (R ) Code Descriptor GDP by sector (%) 21 Agriculture Industry Services (Source: IMF) Light oils and preparations Real GDP growth (%) Inflation Rate (%) 7389 Structures and parts of structures, iron or steel, nes f Current Account Balance (% of GDP) 211f f 211f Parts Equipment for scaffolding, shattering, propping or pit Pumps Quicklime f 211f 3921 Polypropylene Agriculture 55% Industry 11% Services 34% 2928 Organic Derivatives of Hydrazine or Hydroxylamine Electric conductors, 8-1, volts, no connectors Sodium Sulphides

6 Top 1 South African Imports from the DRC (21) Code Descriptor Diamonds ( jewellery) unworked or simply sawn, cleaved Agriculture South Africa has a dual agricultural economy comprising a well-developed commercial sector and a predominantly subsistence-oriented sector. In all, the sector employs 9.3% of the workforce. Water scarcity is a major constraint on production and only 22% of arable land is classified as high potential. Nevertheless, South Africa is normally not only self-sufficient in most food categories but is a net food-exporting country. Large gains in harvests of corn, sorghum and wheat were recorded in 21 but agricultural exports are growing slowly. South Africa imports rice and vegetable oils and, in dry years, wheat. There are strong backward and forward linkages into the economy, with the agro-industrial sector estimated to comprise about 15% of GDP. Mining and minerals In the mining sector, real output rose by 5.6% in 29 less than one-third of the rate of growth recorded in the previous year. Mining accounts for around a third of South Africa s total exports. While gold dominates this sector, South Africa has abundant platinum and also mines diamonds, iron ore, copper, manganese, limestone and chrome. South Africa produces 14% of the world s gold and has 41% of the world s known reserves. The country also has about 8% of known platinum reserves worldwide Hydraulic turbines, water wheels, power < 1 kw Wire of refined copper > 6mm wide Aeroplanes and other aircraft of an unladen mass exc Zinc Dust Special Purpose Motor Vehicles nes Tobacco, partly or wholly stemmed or stripped Graders and Levellers Tobacco Refuse Gears and Gearing (excl. toothed wheels, chain SP) In 21 DRC was ranked as South Africa s 2 th trading partner (4 th in Africa) and 88 th in terms of imports. Source: the dti South Africa has a high level of technical and production expertise in the area of mining and minerals, as well as comprehensive research and development activities. The country also boasts world class primary processing facilities for gold, platinum, carbon steel, stainless steel and aluminium. Manufacturing Manufacturing accounts for 16.4 % of GDP and output grew in real terms by 2.9% in 29. Automobile assembly, agro-processing, textiles and clothing, electronics, and metallurgy are major industries. The automotive industry is a giant of the manufacturing sector, contributing about 7.5% to the country s GDP and employing around 36 people. It accounts for about 1% of South Africa s manufacturing exports. The industry was hard hit by the global recession with exports and local vehicle sales dropping sharply. Employment shrank close to levels in the year 2. However, from 21 the market began to recover and leading vehicle manufacturers have recently announced plans for expansion. Tourism The economic contribution of the tourist sector has doubled since the end of apartheid and government has prioritised the sector because of its job-creating potential. Officials aim to raise the percentage of long-haul tourists, and hope the positive profile South Africa achieved through the 21 FIFA World Cup will pay off in the longer term by increasing tourism figures. The event coincided with the global recession and preliminary figures suggest it drew 3 additional foreign tourists to South Africa, somewhat lower than projections. Banking and finance The country has a well-developed financial system dominated by five large banking institutions. Banks are required to have 25% black ownership and to direct a portion of their profits to special projects. South African banks all withstood the international financial crisis without any assistance from Government. In many respects banking governance and controls are more conservative than those in industrialised countries. Infrastructure By the standards of developing countries, South Africa has very good infrastructure and service industries. It is often described as the gateway to Africa because it has the largest airline, the biggest rail network and the most developed road infrastructure on the continent. The country s seven commercial ports constitute the largest and best-equipped network of ports in Africa, catering for commercial traffic to and from Europe, Asia, the Americas and the east and west coasts of Africa. Energy Coal is the primary fuel produced and consumed in South Africa and is one of the country s largest sources of foreign exchange. The country s coal reserves are estimated at 3.4 billion tonnes. There is also a highly developed synthetic fuels industry, which uses the country s abundant coal resources and offshore natural gas. South Africa has.32 billion cubic feet of proven natural gas reserves. South Africa has proven oil reserves of 15 million barrels, all of it offshore. Several new discoveries were announced in 26 and 27. The country s oil refining capacity is the second largest in Africa, exceeded only by Egypt.

7 South African banks all withstood the international financial crisis without any assistance from Government. In many respects banking governance and controls are more conservative than those in industrialised countries. Infrastructure By the standards of developing countries, South Africa has very good infrastructure and service industries. It is often described as the gateway to Africa because it has the largest airline, the biggest rail network and the most developed road infrastructure on the continent. The country s seven commercial ports constitute the largest and best-equipped network of ports in Africa, catering for commercial traffic to and from Europe, Asia, the Americas and the east and west coasts of Africa. Energy Coal is the primary fuel produced and consumed in South Africa and is one of the country s largest sources of foreign exchange. The country s coal reserves are estimated at 3.4 billion tonnes. There is also a highly developed synthetic fuels industry, which uses the country s abundant coal resources and offshore natural gas. South Africa has.32 billion cubic feet of proven natural gas reserves. South Africa has proven oil reserves of 15 million barrels, all of it offshore. Several new discoveries were announced in 26 and 27. The country s oil refining capacity is the second largest in Africa, exceeded only by Egypt. For Further Information Contacts at the dti Harold Manamela Deputy Director: Export Promotion ( Africa and Middle East) Department of Trade and Industry Tel: hmanamela@thedti.gov.za Dean Hoff Deputy Director: Investment Promotion and Facilitation Department of Trade and Industry Tel: dhoff@thedti.gov.za South African Embassy in the DRC (Democratic Republic of the Congo) Address: 77 Avenue Ngongo Lutete, Gombe, Kinshasa Telephone: (Cell) Fax: Fax: ndabeniz@foreign.gov.za 9