DA's Plan for Growth and Jobs - Democratic Alliance

BUILDING THE BASE THROUGH TRADE AND INVESTMENTA healthy, growing economy that opens opportunities to all South Africans requires solidfoundations.In successful middle-income countries like Brazil, Turkey and Indonesia, where high rates ofeconomic growth have underpinned rising incomes and rapid declines in poverty andunemployment, governments have paid careful attention to building the base through smarttrade policies and promoting investment.So far, in South Africa, the current national administration has failed to champion oureconomic interests abroad and has preferred consumption and wasteful expenditure overlaying the foundations for future growth.The evidence clearly indicates that the future of the global economy lies in the East andSouth. Our country is located in one of the fastest-growing regions in the world: Africa.This proximity should provide lucrative opportunities for South African businesses andentrepreneurs to market their goods, in much the same way as growth in large developingcountries like China and India is sustained, in part, by large domestic markets.Trade with the continent is hampered, however, by time-consuming import and exportprocedures; complex customs processes; poor regional economic integration; and anunclear and unfocussed trade strategy.Other African countries are out-competing South Africa on many fronts.According to the World Bank’s Doing Business report, our country ranks 144 out of 148countries surveyed for ‘trading across borders’. A brief comparison of procedures required toexport a standard cargo load of goods out of South Africa and Mauritius illustrates this well:Whereas it takes under two weeks and requires five documents to export a container load ofgoods from Mauritius, exporting the same container from South Africa would take a month,require eight documents and cost twice as much.Combined with perceived political instability and considerable policy uncertainty under thecurrent national government, figures such as these are contributing to our country graduallylosing its status as the ‘gateway to Africa’.This is because international companies are finding it more attractive to do business with ourAfrican competitors directly, and as a result, foreign direct investment (FDI) is increasinglybypassing South Africa in favour of more lucrative opportunities on the continent.According to the UN Conference on Trade and Development (UNCTAD) World InvestmentReport 2012, for example, Nigeria has already overtaken South Africa as the top destinationfor investment in Africa in terms of FDI inflow. A recent survey by professional services firmErnst &Young reiterates these findings:Though South Africa has received the greatest number of FDI projects on the continentsince 2003 (827 compared with 563 in Egypt, which comes in at second place) the value ofthese investments puts South Africa in fourth place, at $10 billion over the next five yearscompared to Nigeria, in first place, which is expected to receive $23 billion.This is illustrated by the fact that a number of key multinationals such as General Electric,Coca-Cola, Heineken and Nestle, have chosen to locate their African headquarters inNairobi, rather than the continent’s financial hub: Johannesburg.68 | P a g e